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Euro rises against the dollar

Currency responds to Greece’s new series of austerity measures.

The euro rose 0.3 per cent to $1.3637 but was slightly lower against the pound at 90.60 pence. The currency fell to its lowest level against the dollar for ten months amid ongoing concerns about Greece's €300bn debt.

Greece's deficit stands at 12.7 per cent of GDP, more than four times the permissible level in the eurozone. The government has pledged to reduce the level to 8.7 per cent during 2010.

The government has moved to approve a €4.8bn package of tax rises and spending cuts in the hope that it will convince financial markets that it can meet its debts, and persuade European leaders it is acting decisively.

The measures will include increasing VAT to 21 per cent from 19 per cent, and cutting civil servant bonuses during holidays. However, the austerity measures already proposed, such as raising taxes, changing the pension system and freezing public sector pay have provoked huge street protests and the latest moves are likely to disappoint union leaders.

Greece's Prime Minister George Papandreou is due to visit German Chancellor Angela Merkel in Berlin on Friday, in what could be a key meeting to decide what, if any, European assistance Greece receives. He will visit France to meet President Nicolas Sarkozy soon afterwards.