AFP

The euro rose on Monday against rival currencies, a day after German Central Bank President Joachim Nagel prepared the possibility of the European Central Bank announcing a new interest rate hike to curb rising inflation. The single European currency rose 1.6 percent against the yen and more than 1.4 percent against the dollar. Last week, the European Central Bank raised interest rates in the euro zone by a record 0.75 percentage point, and warned that inflation will remain high for a long time. Sunday Nagl paved the way for the possibility that the European Central Bank will continue to raise rates amid persistently rising inflation. Observers now expect the ECB to raise rates by a large margin in October. "The ECB is expected to raise rates again after these comments," said analyst Craig Erlam of Oanda Financial Services. He added that expectations were referring to the euro's recovery after the heavy losses in the past days, including its decline last week to its lowest level against the dollar in 20 years. The European Central Bank's raising of the cost of lending comes on the heels of the US Federal Reserve's announcement of tightening monetary policies to counter the sharp rise in consumer prices.