Investing.com - Officials at the European Central Bank are concerned about the strength of the single currency, which has risen to two-and-a-half year highs against the dollar in recent months, the minutes of its July meeting showed on Thursday.
Policymakers believed there was a risk that the currency could "overshoot" the meeting minutes showed.
“While most of the recent gyrations in prices of financial assets were down to the region’s economic recovery, “concerns were expressed about a possible overshooting in the repricing by … markets, notably the foreign exchange markets, in the future,” the minutes said.
“It was underlined that the still favorable financing conditions could not be taken for granted and relied to a considerable extent on a continued high degree of monetary policy support.”
The minutes cited two factors in the euro's rise, the first being the removal of political risk following the election of Emmanuel Macron as France’s president. The second factor was market expectations over U.S. interest rates.
“These two factors were now largely priced out, leaving the euro back around the levels prevailing before the UK referendum.”
Last month the ECB held interest rates and asset purchases steady, amid speculation that it will start to scale back its ultra-loose monetary policy in the autumn.
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