Currencies

The dollar is likely to rise against the mark this week as traders scale back expectations that the German central bank is on the verge of raising its benchmark lending rate. On Thursday, Bundesbank president Hans Tietmeyer said Germany doesn't need to hurry to bridge the gap between its rates and those of the 10 other nations adopting Europe's single currency in January.

The dollar fell 0.72 per cent against the mark last week and declined to 132.77 yen, leaving it down 0.50 per cent against the yen for the week. The dollar could rise to 1.80 marks in coming weeks, said JD Jensen, president of Jensen & Co, a money management firm. Still, he expects the mark to strengthen later in the year.

Other Bundesbank officials also suggested they aren't rushing to raise the benchmark securities repurchase rate, now at 3.30 per cent. Otmar Issing, the central bank's chief economist, said the European Central bank wouldn't sacrifice "growth or employment" for price stability.

"German officials have been trying to say there's no reason to raise rates immediately," said John McCarthy, manager of foreign exchange at ING Baring Capital Markets. "The market finally got the message."

Still, traders expect the dollar to decline against the mark in coming months as European countries recover from a prolonged slowdown. Germany is also likely to raise its short-term lending rates, which will boost the mark.