Jim Rogers: I Bought the Euro; Oil to Go Higher

As European governments promised they will take steps to reduce gaping budget deficits, famous investor Jim Rogers told CNBC he bought the single European currency, as he said he would.

"I bought the euro Friday and Monday, I don't know if it's just a trading bounce or if it's going to be fundamentally sound from now on," Rogers said in an interview from Madrid Wednesday.

Jim Rogers
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Jim Rogers

The euro hit a two-week high versus the dollar in early European trading, helped by improved tolerance towards risk after Tuesday's rally on Wall Street.

Jitters regarding Spain continued, however, with the European Union forced to deny a newspaper report that it was looking into a credit line for the country, together with the International Monetary Fund and the US Treasury.

On Tuesday, economist Nouriel Roubini told CNBC that a breakdown of Spain would cause a worse crisis than Greece did, because the country is one of the top four EU economies, has had a housing bubble and has an unemployment rate of 20 percent already.

Various European governments, including Spain, Portugal and Greece but also Germany, have pledged austerity measures to cut back public debt, but Rogers said he was skeptical.

"I don't believe them, of course, but maybe they mean it this time," he said.

Reforms must be done both at a country level and at the level of the entire union, according to Rogers.

"The EU says they are going to force everybody now to run a tight ship. It has to be everybody. If it's not everybody, is not going to work," he said.

No Drilling, No Oil

A good long-term buy is oil, Rogers said, because drilling opportunities are dwindling as the Obama administration mulls banning offshore operations after a well owned by BP ruptured on April 20, causing the biggest oil spill in the US history.

"I guess if anything you would buy oil because… drilling has been cut back. No drilling, no oil – higher prices," he said.

"The IEA is going around the world pleading with governments to understand that oil is running out. Where is the oil? Tell us, so we can buy it," he said when asked about opinions by other analysts that there are plenty of oil reserves.

- Watch the full interview with Jim Rogers above.

Alternative energy resources will be developed and new drilling permits will be issued when the price of oil will go higher, he said.

"At $200 (per barrel of oil) they'll be drilling for oil at Buckingham palace," Rogers said.

BP shares in London were lower in Wednesday morning trade, while the oil company's shares listed in New York closed higher Tuesday.