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. Last Updated: 07/27/2016

Dollar Hits 1.15 Euros, 31.1 Rubles

The euro extended a four-year high against the U.S. dollar on Friday, supported by the yield advantage European assets hold over U.S. assets, before investors booked modest profits that left the euro little changed on the day.

Thursday's decision by the European Central Bank to leave benchmark interest rates at 2.50 percent, double those in the United States, preserved the main reason for investors to continue putting their cash into European assets.

For the week, the euro rose 2.25 percent against the greenback to $1.154, its highest level since it was launched in January 1999, before pulling back to $1.149. The euro is now about 2.5 cents from its launch price at $1.175.

Meanwhile, in Moscow the ruble firmed against the dollar as soaring Central Bank foreign currency reserves pointed to a solid inflow of oil dollars and gave a fresh boost to bullish sentiment on the local currency.

Ahead of a three-day weekend, the currency rose Thursday to a weighted average for settlement of 31.10 to the dollar from 31.11 on Wednesday, its further gains curbed by the Central Bank.

"The Central Bank is now the only real force preventing the ruble's rise," Artyom Roshchin at Aljba Alliance said.

Under pressure from the local industrial lobby that says a strong ruble erodes its competitiveness, the Central Bank has been soaking up extra dollars at 31.10 for more than two weeks, resulting in a fast rise of its reserves.

The Central Bank's gold and foreign currency reserves leapt by $1.6 billion to a fresh all-time high of $59.9 billion in the week to May 2. But the rise, seen enhancing Russia's creditworthiness, resulted in a fast expansion of the country's monetary base, highlighting inflationary risks as the Central Bank has to print rubles to buy dollars from the market.

"They are essentially choosing a monetary policy of mandated foreign exchange regime rather than inflation targeting regime," said Al Breach, a chief economist at Brunswick UBS.

The Central Bank has tried to switch the focus of its monetary policy to targeting inflation rather than the exchange rate, but it came under fire from top economic managers who fear a strong ruble may slow economic growth.