World Bulletin / News Desk
The euro extended its gains in Asia on Friday after the head of the European Central Bank said policymakers would begin re-evaluating its stimulus in the autumn, fuelling talk that the age of cheap money was coming to an end.
The news is the latest to dent confidence in the president’s ability to push through promised market-friendly reforms, which had helped fire a global surge in the months after his November election win.
ECB boss Mario Draghi on Thursday tried to play down talk the bank is preparing to wind in its 60 billion euros ($69 billion) a month asset-buying scheme saying inflation remained tepid.
However, he added: “We simply said that our discussions should take place in the fall, or in autumn, since we are in Europe.”
While Draghi tried to remain guarded, traders took that to mean the bank would soon announce a “tapering”.
“The ECB’s indication that it will discuss possible changes to its bond buying programme over coming months has been taken as confirmation that it’s likely to begin tapering by early next year,” said CMC Markets chief market analyst Ric Spooner in a commentary.
The euro — already on the march against the dollar as the eurozone economy picks up — ploughed one percent higher Thursday to near two-year highs and in Asia pushed on to $1.1642. It is also sitting at highs above 130 yen for the first time since February 2016.
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