Euro Problems - VERY important reading!! You'll see a Y2K connection.
EURO INTRO BROUGHT BRITISH BANKING CLOSE TO ECONOMIC COLLAPSE - May 14, 1999
Scramble for billions during two weeks of trading gridlock
Message 9546755
EURO BLAMED FOR VIOLENT CLASHES AT FRENCH POST OFFICE
January 7, 1999
Message 9733670
T O D A Y
EURO'S LOSSES READY TO ROLL ON AS NO ECB MOVES
Wednesday May 26, 6:18 pm Eastern Time
By Svea Herbst-Bayliss
NEW YORK, May 26 (Reuters) - Hours after Europe's single currency hit a fresh record low against the dollar, U.S. market analysts said the euro is destined to fall further, in part because European leaders appear ready to let it sink.
''When the euro breaks lows as it did this morning, we go lower still, especially when we hear politicians say they are not concerned about levels at a time the currency is already breaking down,'' Warburg Dillon Read analyst Tomas Jelf said.
Catching its breath after losing nearly 1.5 percent in value against the dollar during the global trading day on Wednesday, the euro drifted sideways near $1.0460/67 in early U.S. afternoon trading.
But analysts say it has no reason to stop here.
''It is difficult to pinpoint specific levels after we broke past the $1.0545/50 double bottom, but I have my eye on $1.0410 which was the low put in place in August 1998 (on the synthetic charts),'' CIBC Wood Gundy analyst Martin Autotte said.
If euro/dollar closes New York trading below $1.0440, which many analysts said is likely, the path to $1.0345 looks clear.
Wednesday's sharp losses had two triggers -- first dealers worried European budget discipline is crumbling and second they rejoiced that central bankers and politicians showed no signs of concern about it.
European Finance Ministers have allowed ITALY to overshoot a budget deficit target of 2 percent of gross domestic product this year in case of a serious slowdown in growth.
European Central Bank Governor Wim Duisenberg said on Wednesday that it would not do the euro any good if the finance ministers' concessions on tolerating Italy's budget deficit overshoot became a precedent.
Then Portugal's Finance Minister Antonio Sousa Franco on Wednesday and German Finance Minister Hans Eichel on Tuesday said there is no need to rescue the euro with intervention.
Meanwhile Portugal's central bank governor Antonio de Sousa said the euro/dollar weakness was not directly related to Italy's budget problems as German Bundesbank President Hans Tietmeyer on Tuesday blamed structural problems for losses.
''Obviously intervention is not much of a threat,'' Jelf said, echoing dealers' optimism that Europe will not snap back at them for pushing the currency down too fast.
Earlier in the year there had been some talk that the $1.0500 level represented a sensitive point where the European Central Bank may move toward buying the euro back officially, but at the moment there is little active talk about this.
''There are rumors that some of the central banks are in there smoothing things out but maybe that is just talk from people who are long euros. There seems to be no immediate danger of real intervention now,'' a dealer said.
In fact analysts said a lower euro may indeed be desirable if it helps prop up European exports and stimulate growth.
Some analysts offered a different view on why policymakers seemed so indifferent to the euro's demise, arguing they would keep talking until ECB chief Duisenberg tells them to say something else.
''I think Duisenberg would need to initiate any sort of shift in talk about the euro. They may be waiting for his lead,'' said Barclays Capital senior economist Henry Willmore.
In late April, European officials appeared to join forces by speaking out often and forcefully about the strengths of the euro and saying that sales were overdone. Privately officials said this was a
broadbased effort to dispel sentiment that the ECB is practicing a policy of benign neglect.
But the efforts worked only briefly before the euro hit its previous lifetime low at $1.0537 on April 30.
Now dealers agreed the ECB would have to put its money where its mouth is and intervene in order to actually frighten the market away from more aggressive euro sales.
While there is now widespread concern about intervention, Willmore said this may actually work to Europe's advantage if it decided to move.
''I could see the ECB intervening if only to straighten out what they may perceive as a market overreaction to the Italy budget situation,'' he said, adding sometimes these actions happen out of nowhere.
biz.yahoo.com
SPEAKING OF ITALY - LOOK WHAT JUST CAME OUT LAST WEEK ...
OFFICIALS given the task of ridding Italy of the millennium bug issued a
warning yesterday that, with just over seven months to the deadline, a
promised £2 million budget had yet to be approved by parliament - and they
still had no powers to force companies and government departments to comply.
"Italy is going to crash, and we are going to be crucified," Romano Oneda, the education expert on Italy's Year 2000 Committee, said. "We are supposed to make things go so smoothly that nobody would realise there was ever a problem. Instead we will be the scapegoats. We have only consultative powers, and no one is listening to us."
Roberto Di Martino, a computer software expert on the committee, said "even now no executive wants to tell his company they have to spend both time and money on this".
Augusto Leggio, whose task is to persuade the transport and
telecommunications sectors to face up to Y2K, said the problem was "so vast there is no point in getting hysterical". He said the Interior Ministry, which controls police and immigration services, hoped to guarantee most essential services by the end of this year, but would not be fully compliant until July 2000. "I don't think they have quite grasped what this is all about," one official said.
Message 9525386
Did you get that date? JULY 2000.
Cheryl
|
