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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ED_L who wrote (49732)	5/7/2000 10:21:00 PM
From: Jack Hartmann	Respond to of 99985

ECB talks euro intervention Comments by European Central Bank President Wim Duisenberg have failed to boost the ailing single currency. In an unprecedented ad-hoc statement, Mr Duisenberg said the euro was, and would remain, a stable currency and the European Central Bank (ECB) would do all it could to keep prices stable. European citizens can be assured that the future of the euro is of a strong currency based on the stability and the strength of the European economy ECB president Wim Duisenberg He said the central bank was aware of people's concern about the value of the currency and was monitoring the exchange rate "very closely". The comments failed to help the euro, which slipped a quarter of a cent from a high for the day of $0.8950. Traders have seen the euro lose 24% of its dollar value On Thursday the single currency had hit an all-time low of $0.8844, a 24% decline since its launch in January 1999. Market rumours that central banks had intervened to prop up the currency temporarily stemmed its decline. Traders bought back euros suspecting that this might be the start of a large-scale market intervention, which never materialised. There hopes were revived after ECB vice president Christian Noyer said later on Friday that action to prop up the euro was an option, describing the current euro/dollar exchange rate as "ridiculous". That gave the euro a pep, sending back to just below the 90 cents mark. Currency traders described the market as very nervous and volatile. The markets aren't taking any notice of the uncertainty in the US and the improvement in Euroland economic fundamentals. So far the European Central Bank has never intervened on the markets. Eurozone central bankers and politicians keep repeating the mantra that the euro has upward potential, but according to Chase Manhattan economist Adrian Schmidt "it's not very helpful" to keep saying that "and then doing nothing to keep it from falling". "If they want the euro to appreciate, they need to do something, and they probably should", he added. And the pound has also hit a record high against the euro, increasing the pain for UK exporters. Traders say that the prospect of fresh interest rate rises in the US and the UK has persuaded many investors to flee the currency. Euro prospects During the past year, a majority of economists predicted the imminent resurgence of the single currency. It never happened. But most currency analysts are still somewhat optimistic about the euro's future. They believe that the euro will be back above one dollar within the coming year, according to a poll compiled by Reuters. But market observers note that some long-term investors have now lost faith in the prospects of the currency. Neil Parker, a senior European economist at Royal Bank of Scotland, warned that investors had "lost all confidence and there is a desire to get into something that will hold its value, like the dollar or the pound". news.bbc.co.uk ************** A weaker dollar would help US companies selling products in Europe. Doesn't seem to hurt the stock prices of many European companies though. Jack