Azerbaijan, Baku, Feb. 25 / Trend /
Morgan Stanley, the U.S. investment bank raised its forecasts for the euro against the dollar and the yen, citing increased rhetoric from the European Central Bank about the need for tighter monetary policy to combat inflation, Bloomberg reported.
The U.S. bank also boosted its targets for the single currency saying recent flexibility from European officials in addressing the sovereign debt issue have significantly reduced the risk of the crisis spreading.
"We've trimmed and pushed back our call for euro depreciation to reflect the ECB's hawkish policy posture and more sanguine assessments of EMU sovereign risk," Gabriel de Kock, an executive director at Morgan Stanley in New York, wrote in a note to clients.
The U.S. bank increased its March 31 target for the single currency to $1.32 from $1.25, and boosted its year-end forecast to $1.24 from $1.20, according to the note. The company raised its end-of-March prediction for the euro to 111 yen from 108 yen, and its year-end target to 115 yen from 112.
The euro traded at $1.3822 as of 10:55 a.m. in Tokyo after climbing to $1.3837 earlier today, the strongest since Feb. 2. The single currency was at 113.23 yen.
Morgan Stanley lowered its March-end prediction for the dollar to 84 yen from 86 yen, and maintained its year-end forecast of 93 yen.
Analysts surveyed by Bloomberg forecast the euro will weaken to $1.32 by March 31, and trade at $1.33 by year end. They predict the dollar will be at 85 yen by March 31, and 89 yen by Dec. 31.