The International Monetary Fund and finance ministers from the 16 countries using the euro believe the single currency is overvalued, the ministers’ chairman said on Tuesday. The head of the IMF’s European department, Marek Belka, presented a regular report on the euro zone economy to the currency area’s finance ministers and European Central Bank President Jean-Claude Trichet. “We agreed with him when he said that the euro was overvalued and that some adjustment in that area would be desirable,” the Euro group’s chairman, Jean-Claude Juncker, told a news conference.

Article courtesy of Accredinet

The interbank cost of borrowing dollars slipped on Wednesday after dovish comments from a Federal Reserve official reinforced expectations the U.S. central bank will maintain a loose monetary policy at least into next year. U.S. Federal Reserve Vice Chairman Donald Kohn made the case for a prolonged period of ultra-low interest rates late on Tuesday, saying the U.S. economy would not quickly snap back from its deep recession. Kohn’s comments followed remarks from Fed Chairman Ben Bernanke late last week, who said the central bank will need to tighten monetary policy as the economic recovery takes hold. Bernanke’s comments spurred a sharp selloff in the bond market and boosted the dollar on Friday as investors speculated the U.S. central bank could move to raise interest rates sooner than originally expected. Still, most U.S. primary dealers expect the Fed to hold off from raising the benchmark federal funds rate from its near-zero level until the second half of next year or later, according to a recent Reuters poll