Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: Gilbert Drapeau who wrote (2884)	1/14/2001 9:25:09 AM
From: zbyslaw owczarczyk	Respond to of 3891

EU Finance Chiefs Say Euro Still Has Room to Rise, May Reach $1 By Francois de Beaupuy and Catherine Hickley Kobe, Japan, Jan. 14 (Bloomberg) -- European Union finance ministers said the euro will extend its recent gains against the dollar as economic growth in the 12 nations sharing the currency outpaces that of the U.S. for the first time in a decade. The euro, which traded at 95.12 U.S. cents Friday, has risen 14 percent since it hit a record low of 82.31 cents in October as the prospect of slackening U.S. growth made dollar-denominated investments less attractive. As the world's biggest economy slows more than expected this year, Europe will take the reins of world economic growth, adding to the single currency's gains, EU ministers said. ``We consider that the euro still has quite a significant margin for appreciation,'' French Finance Minister Laurent Fabius told reporters after a two-day meeting of 25 European and Asian finance ministers in Kobe, Japan. The euro should match the dollar's value ``in the not too distant future.'' The euro's plunge last year stoked inflation, prompting the European Central Bank to raise its benchmark interest rate two-and- a-quarter points to 4.75 percent starting in November 1999. Faster inflation, exacerbated by rising oil prices last year, also curbed consumer spending. Breaking Ranks Still, further gains in the euro may not be welcomed by every European government. Austrian Finance Minister Karl-Heinz Grasser hinted there may be a danger the euro will rise too far, too fast, hurting the competitiveness of the region's exports. ``We are very happy with the euro's development,'' Grasser said in an interview. ``Of course, against the background of exports, we have to see how high we want it to go.'' Grasser's comments are the first from an official of the 12 euro nations suggesting further gains in the euro could pose a risk to the economy. A weak euro helped boost euro-zone growth last year by making European exports cheaper for overseas customers. Other European finance chiefs shared Fabius's view that the euro has more room to rise as Europe overtakes the U.S. as the main driver of world growth this year. ``We are going into a better comparison between the U.S. economy and the European economy,'' Belgian Finance Minister Didier Reynders told a press conference. ``For the future, I am sure we will see a stronger euro in relation to the stronger economy.'' Trading Places U.S. President Bill Clinton expects the U.S. economy to expand about 2.5 percent this year, the smallest increase since the record expansion began in 1991. Some say that forecast is too optimistic -- Morgan Stanley Dean Witter & Co. economists expect the economy to contract in the first half of 2001 and grow just 1.1 percent for the whole year. By contrast, the 12 nations that share the single European currency will probably grow about 3.2 percent this year, according to European Commission estimates. The U.S. economy has grown faster than Europe's for the last nine years. The euro isn't just gaining against the dollar. The Japanese yen has weakened 18.2 percent against the euro in the last three months, and the South Korean won has slid 20.4 percent against the single currency. Spanish Finance Minister Rodrigo Rato downplayed the threat a stronger euro may pose to the region's exports. ``Of course, the competitiveness of European exports to outside markets won't get help from a weaker euro, but we believe the competitiveness of our products is based not only on price,'' Rato said. ``You have to take into account that outside exports only account for 2 percent of gross domestic product, so the consequences of those movements will be very light.'' Shared Script In September, euro-zone finance ministers gave the European Central Bank the go-ahead to buy euros for dollars to prop up the slumping currency. In a statement, they expressed ``common concern'' at its decline and pledged to ``closely follow the situation.'' Facing criticism that they damaged investor confidence in the euro by commenting too often and too inconsistently on the euro's exchange rate, ministers have since then tried to stick to a common script, repeating that the euro is undervalued and doesn't reflect the sound European economy. ``The euro had room to appreciate, and that is now underway,'' German Finance Minister Hans Eichel said.