Euro tumbles as ECB considers dropping deposit rates

Published: 21 Nov at 9 AM Tags: Euro, Dollar,

The euro has dropped following a report that negative deposit rates are being considered by the European Central Bank as a way of pushing inflation up.

Additional pressure was put on the single currency as details of the minutes from a Federal Reserve policy meeting indicated that the US economic outlook was strong enough for the central bank to consider easing its stimulus programme at a meeting in the near future.

Some analysts believe that tapering by the Fed could begin as early as next month, but this will depend on crucial labor figures for November. If the US cuts its massive bond buying programme interest rates are likely to rise and this will make investments based on the dollar more attractive.

ECB boss Mario Draghi announced a record interest rate cut recently and has also said he would be prepared to push into negative territory if that was what was required to boost the economy.

The euro dropped to a low of $1.3417 before settling at $1.3428, a fall of 0.81 per cent. The currency was also down 0.84 per cent against the yen to 134.38 yen. The dollar index, which measures the greenback against a basket of other currencies, was given a boost to 81.093.