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 FRANKFURT, Germany (AP) - The dollar rose to a 4-1/2 month high against the euro on Tuesday after U.S. Federal Reserve Chairman Alan Greenspan said the impact from the spike in energy prices after the Gulf Coast hurricanes will not be as severe as from the oil shocks of the 1970s.
The euro bought $1.1950 in late New York trading — down from $1.2035 in New York late Monday. The dollar also rose to 115.65 Japanese yen from 114.88. At midday, the dollar reached a two-year high against the Japanese currency, climbing to 115.89 yen on the view the Federal Reserve will not be deterred from raising interest rates. Higher rates bolster a currency by increasing the return on some assets denominated in it.
Greenspan, speaking in Tokyo, said with world oil markets exceptionally tight because of rising global demand, the likelihood of a sizable spike in prices because of the loss of Gulf Coast production was "an accident waiting to happen." But he added it should not have the severe economic impact of the 1970s oil shocks.
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