from: http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Single Currency Euro Continues to Crash Trichet will save the euro like he did Credit Lyonnais! THE euro crashed to new lows against the pound and the dollar yesterday, deepening the crisis of confidence in the single currency. This prompted fresh warnings that the high level of sterling was crippling British industry, but Tony Blair ruled out intervention to reduce its value. At the close in London, the euro was valued at 57.08p, down from 58.12p overnight and a launch value of 71p. It closed at 89.18 cents against the dollar, down from 90.77 cents overnight and a launch value of $1.20. It was the first time the euro had fallen below 90 cents, an important benchmark for the currency, since its launch last year. While the continuing fall means that British holidaymakers on the Continent will get more foreign money for their pound, the price of British exports has risen by 20 per cent in euroland. If, as expected, the Bank of England's Monetary Policy Committee raises interest rates today by a quarter point to 6.25 per cent, the pound could rise still higher against the euro. Investors who fell for the hype surrounding the euro's launch want to cut their losses. Paul Meggyesi, of Deutsche Bank in London, said: "It has been a one-way trend for an awfully long time and investors have now decided to throw in the towel." The fall in the euro has wrong-footed Gordon Brown, the Chancellor, who last May announced plans to sell more than half the country's reserves of gold and instructed the Bank of England to reinvest 40 per cent of the proceeds in euros. Mr Brown described the controversial plan as a sensible move aimed at diversifying the reserves. However, the euro's weakness has led to a direct loss of £34 million. Despite some offsetting gains on dollars and yen, the overall loss is still £26 million. Yesterday's collapse in the euro sent the pound to 14-year highs against the mark and the franc. It closed at Dm3.43 and at Ff11.49. Michael Heseltine called for Government action to prevent manufacturing industry being wiped out by the strength of sterling. The former deputy prime minister, who announced last week that he would be standing down as a Tory MP, urged Mr Blair to put an end to the uncertainty over the Government's intentions on the single currency. He claimed that industry was facing "carnage" as a result of the current strength of sterling against the euro. At a press conference organised by the Britain in Europe campaign, he said Mr Blair could stem the rise in the pound by making clear that it was the Government's intention to join the euro - and at a lower exchange rate rather than sterling's present "unrealistically" high value. Failure to act could bring problems similar to those threatening companies such as Rover at Longbridge and Ford at Dagenham. But Mr Blair told MPs at Question Time that "the worst thing we could do" would be to try to devalue sterling artificially. The renewed slide in the euro coincided with the European Commission decision to recommend Greece for membership of the eurozone from Jan 1 next year. The announcement was greeted frostily by the European Central Bank, which said that Greece needed to do more to reduce its debts and bring inflation under control. The prospect of Greek membership had little direct impact on sentiment, but analysts said that it would create a new source of tension within the eurozone. They noted that European economists were already trading accusations about which government was to blame for the euro's dismal performance. The latest downward lurch in the euro follows news at the end of last week that Jean-Claude Trichet, the governor of the Bank of France, is to be investigated for his role in the scandal surrounding Credit Lyonnais, the French state-owned bank. M Trichet, 57, who sits on the board of the European Central Bank, was the French government candidate for president and has been lined up to succeed Wim Duisenberg when he steps down. The Trichet affair has added to concerns about the ability of the Central Bank to manage the new currency. Analysts said that sentiment on the euro was now so negative that all news was seen as bad news. They also expressed dismay at the failure of politicians to recognise the seriousness of the problem. Jim O'Neill, chief currency economist and a partner at Goldman Sachs, said: "Investors are fed up with all those preposterous statements about the euro having potential to appreciate in the long term. If they want people to believe their statements they should back them up with action." * In a letter published in The Daily Telegraph today, 14 Tory Euro-MPs express concern at reports that Britain's biggest companies could be forced to list their shares in euros rather than sterling after the merger of the London and Frankfurt stock exchanges. The London Telegraph, May 4, 2000 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. 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