<<As a result there won't be any concrete action that chnage the status quo nd the road to Jay's TEOTWAWKI.>>
Message 19696490
Today, a week later. No conrete action!!!!!
Euro rises on failure to turn words into action
By Tony Major in Frankfurt, George Parker in Brussels and Jennifer Hughes in London
Published: January 20 2004 21:51 | Last Updated: January 20 2004 21:51
Euro rises on failure to turn words into actionEuropean attempts to talk down the euro suffered a setback on Tuesday as eurozone finance ministers failed to convince the markets of their willingness to back their words with concerted action.
The euro rose 1 per cent to $1.2592 as the market interpreted a communiqué from the finance ministers late on Monday night as being too timid to cool the currency, which has surged 20 per cent over the past year.
Charlie McCreevy, Irish finance minister and chairman of the eurozone meeting, refused to respond to suggestions that the statement had been too timid.
But one EU official said ministers, concerned that the euro's rise might stifle the fragile eurozone upturn, had restrained their comments because they wanted to "keep their powder dry".
In their communiqué, the 12 eurozone ministers stressed the need for stability and expressed "concern about excessive exchange rate moves". Analysts said their failure to hint at further action had backfired.
Trevor Dinmore, strategist at Deutsche Bank, said: "There was no mention of actual intervention or perhaps rate cuts to stem the euro's rise - this was more of the amorphous verbal intervention we saw last week. The market is really looking for a sense of what follow-through we might see from the eurozone."
Otmar Issing, the European Central Bank's chief economist, yesterday tried to take the steam out of the euro's rise when he warned against "excessive exchange rate volatility", but his comments had little effect on the markets.
Echoing ECB president Jean-Claude Trichet's recent concern over "brutal" currency moves, Mr Issing said the bank was "not indifferent - but concerned about the short-term outlook of the exchange rate".
He said "verbal intervention" by the ECB in recent days had had "quite a substantial impact" on lowering the value of the euro.
It had made market participants "aware that this might not be a one way street", he added, in remarks before the European parliament's economic and monetary affairs committee.
Last week the euro tumbled from record highs after a raft of comments from eurozone policymakers.
Separately, Hans Eichel, the German finance minister, cast doubt on how long the eurozone's upturn would last, insisting that the sustainability of eurozone growth was "not yet guaranteed".
Mr Eichel said it was significant that Europe had now agreed a common position before next month's Group of Seven meeting in Florida, which ministers hope will send a strong signal on currency stability.
Francis Mer, French finance minister, said ministers had made clear they wanted "stable" exchange rates. He said: "Stability is a dream because we are in a market but perhaps there are limits not to be trespassed."
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