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Gold/Mining/Energy : Euro Impact on Gold, USD ... -- Ignore unavailable to you. Want to Upgrade?

To: banco$ who wrote (128)	12/14/1998 9:09:00 PM
From: banco$	Read Replies (1) \| Respond to of 289

"Will sterling take a pounding?" - Tuesday, December 8, 1998 (BBC) The last week of December and the first week of January are normally a sleepy time on the world's financial markets. But as the BBC's Rodney Smith explains, this Christmas and New Year the market movements will be frantic, and the pound and other European currencies could be in for a hammering. We are all waiting for the big day, aren't we? The 4th of January? We don't know exactly what will happen when the euro fires up. But some people think that the first casualties could be the pound, the Greek drachma and the Danish krone. And not for the obvious reasons. They are all constituent currencies of the Ecu, the about-to-be-abandoned European Currency Unit. At the end of the month, probably in the last week of December, bankers and the rest will start swapping Ecu for euros. The trouble is, the pound, the krone and the drachma all appear in one but not the other. So they will be surplus to requirements. As a result, they will be ejected, and the currency markets could become awash with pounds drachmas and krone. Worst of all will be pounds because of their greater weighting. Their exchange rates could drop markedly against the euro, the dollar and the yen. The situation is compounded by the recent very active market in Ecu bonds, says Michael Lewis at Deutsche Morgan Grenfell. There is a real market rate for the basket which makes up the Ecu which is usually slightly different to the theoretical Ecu. That gap, usually around 0.2% to 0.3%, widened to around 1.25% at one stage - driven by demand from deft traders who were making a killing on that seemingly small spread. Their legacy is that these positions will now have to be unwound - and this is where the real damage could occur. The Bank of England is believed to be aware of the situation and has warned the banking system of a possible crunch. So watch the pound. The British economy is sagging, pressure is growing for a cut in interest rates, but a sudden sharp fall in the pound associated in the public's mind with the euro could knock the prospect of cheaper money on the head. On the upside, it could be a huge Christmas gift for all those sectors of British manufacturing industry that are being squeezed to death by a high cost of capital and a forte exchange rate. news.bbc.co.uk

To: banco$ who wrote (128)	12/16/1998 10:24:00 PM
From: banco$	Read Replies (1) \| Respond to of 289

"Nippon Life says to mull raising euro investment" - TOKYO, Dec 16 (Reuters) - Nippon Life Insurance Co, Japan's largest life insurer, said on Wednesday it would consider boosting investment in euro-denominated assets. Nippon Life will consider increasing investment in euro-denominated assets to about 50 percent of its overseas investment in the near future, a company spokesman said. Nippon Life's mid-term business report released last month showed the firm's main account allocated nearly 70 percent of its overseas investment in dollar-denominated assets as of the end of September. Its exposure to currencies of nations that will participate in the first wave of monetary union when it is introduced at the beginning of 1999 stood at around 22 percent. A Nippon Life official said last month the merits of the European single currency from the investor's standpoint were that it would create a highly liquid bond market and would decrease the need to worry about currency fluctuations. Nippon Life's assets totalled 43.2 trillion yen at the end of September and its holdings of foreign securities totalled 4.9 trillion yen. The Financial Times reported on Wednesday that if the launch of the euro went smoothly, Nippon Life would consider increasing its exposure to the euro to 50 percent of its overseas investment over the next two years. The paper quoted Kiyoshi Ujihara, general manager of Nippon Life's international investment department as saying the insurer was now ''considerably overweight'' in dollar-denominated assets when compared to Salomon Smith Barney's World Government Bond Index, which the firm uses as an internal benchmark. In Salomon's World Government Index for December, U.S. Treasuries had a weighting of about 31 percent, while government bonds of the countries that will join the euro from January accounted for 36 percent of the index.