Top Financial News
Mon, 25 Sep 2000, 2:51am EDT
Euro Rounds Off Biggest Three-Day Rally Ever; G-7 May Buy Again
By Miki Anzai and Mari Murayama
Tokyo, Sept. 25 (Bloomberg) -- The euro rounded off its biggest three-day rally ever against the yen and the dollar after officials from the Group of Seven nations suggested they may repeat Friday's joint purchases of the currency.
``People are cautious about possible intervention in Tokyo time,'' said Makoto Hino, a foreign exchange manager at Toyo Trust & Banking Co. ``We can't sell euros the next (trading) day after central banks conduct euro-buying intervention.''
The euro rose to 94.85 yen from 94.60 in New York Friday. It also rose against the dollar to 88.01 U.S. cents from 87.65 late in Friday. It was the fastest three-day gain against the yen and the dollar since the euro debuted in January 1999.
The yen trimmed some losses against the euro and edged up against the dollar as the Bank of Japan had not yet stepped into the currency market today, traders said. The yen rose to 107.78 per dollar from 107.92 in New York Friday.
The Bank of Japan probably won't buy euros on its own during Tokyo trade today, according to nine of ten analysts interviewed by Bloomberg News today.
The next time the central banks buy euros may be when the euro falls below 85 U.S. cents or 91 yen, said Yasuharu Tsuru, a foreign exchange manager at Mitsubishi Trust & Banking Corp.
``If the European Central Bank wants to shore up the currency more, the bank may ask the Bank of Japan to buy euros on its behalf,'' said Tsuru. ``The euro may gradually fall if no more intervention takes place.''
First Joint Action
The 11-nation currency surged as much as 4.5 percent against both the yen and the dollar Friday, when central banks from the euro-region, the U.S., Japan, the U.K. and Canada said they bought euros. The G-7 nations -- the U.S., Japan, Germany, the U.K., France, Italy and Canada -- concluded a meeting Saturday saying they plan to cooperate again ``as appropriate.''
The central banks bought several billion euros, traders estimate, attempting to halt a slide in the currency that brought the currency to record lows Wednesday.
The first joint action on the euro helped boost it to 90.40 U.S. cents and 96.20 yen Friday, the highest levels since Aug. 28, according to the Electronic Broking System. That's up 7 percent against its all-time lows of 84.39 cents and 90.05 yen.
``What concerns me is that the central banks jointly intervened,'' said Takashi Toyahara, foreign exchange manager at Nomura Trust and Banking Co. ``We can't carelessly sell euros.'' He expects the euro to recover 90 cents by the end of this week.
G-7 central bank governors and finance ministers confirmed Friday's joint intervention in a statement at the end of their Saturday meeting in Prague.
The officials said they bought euros because of a shared concern a weak currency and a surging oil prices will hurt global economies. They warned in the statement they will keep watching ``developments closely and cooperate in exchange markets as appropriate.''
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