21 January 2004

Search all issues

powered by FreeFind

Send Your Feedback!

Euro sees biggest rise in two months after EU ministers’ meeting

The euro had its biggest advance against the dollar in two months in New York this week after European finance ministers ended a meeting with "no view" on how to stem gains in the currency, with the currency gaining another one per cent against the dollar yesterday.
Irish Finance Minister Charlie McCreevy, who chaired the meeting late Monday, stopped short of calling for action from the European Central Bank. The ministers said they wanted to "particularly stress stability" in exchange rates after the euro last week rose to a record USD1.2899 per dollar.
"Ministers effectively gave the green light for the euro to climb steadily, not rapidly, back to USD1.30," said Steve Pearson, chief currency analyst in London at HBOS Treasury Services Plc.
Against the dollar, the euro surged to USD1.2505 at 9:03 a.m. in New York from USD1.2349 late yesterday, according to EBS prices. Versus the yen, the euro strengthened to 134.38 yen from 132.45, the biggest increase since September, after the Bank of Japan unexpectedly added cash to the economy. The yen traded at 107.55 per dollar from 107.25.
The BOJ decision, predicted by just one of 15 economists polled by Bloomberg News, may be an effort to help slow the yen’s gain against the dollar and the euro in the past year and protect exports, said Hans Guenter Redeker, head of currency strategy at BNP Paribas SA in London.
European ‘rhetoric’
This week’s surge in the euro came as European officials including ECB President Jean-Claude Trichet last week expressed concern about "brutal swings" in the exchange rate after the euro rose more than a fifth in a year. French Finance Minister Francis Mer told reporters today his main worry is "volatility" in the currency. "We want to have a stable rate," he said.
"Rhetoric can only last so long without policy backing it," said Lee Ferridge, head of currency strategy at Rabobank Groep NV, the third-largest Dutch bank.
The euro rose even as German investor confidence fell in January for the first time in three months. Germany’s recovery from recession in the third quarter may be damped as the euro’s 17 percent appreciation against the dollar in the past year crimps earnings of exporters including Volkswagen AG. Germany accounts for almost a third of the euro economy, which also recovered in the third quarter.
Irish Finance Minister McCreevy said "there was no view" on how the EU might stabilise currency markets after the dozen euro- region ministers called for "stable" exchange rates in a joint statement with the ECB.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail