The euro rose sharply against the dollar on Monday after a European Central Bank policymaker said the shares currency was not overvalued at current levels.

The comment follows calls last week by French President Francois Hollande for an exchange-rate mechanism to protect the single currency from market fluctuations.

The euro rose to $1.3424, up 0.4% from Friday.

Meanwhile the Japanese yen tumbled against the dollar and the euro after US Treasury Undersecretary Lael Brainard said the US backs Japanese efforts to tackle deflation and stimulate growth.

However she added that Japan must deliver on its commitment to market driven exchange rates and refrain from competitive devaluation.

Tension has been heating up in currency markets after Japan took action to stimulate its economy. However Japan has denied that its manipulating its currency.

The dollar index, which measures the dollar against a basket of six major rivals, stood at 80.201 compared with 80.234 on Friday.

The British pound fell to $1.5658 from $1.5794 previously.



CJ

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