-Caveat Lector-

from:
http://www.telegraph.co.uk:80/et?ac=003663685154538&rtmo=V68kD8sK&atmo=rrrrrrv

s&pg=/et/00/10/20/cneur20.html
Click Here: <A
HREF="http://www.telegraph.co.uk:80/et?ac=003663685154538&rtmo=V68kD8sK&atmo=r

rrrrrvs&pg=/et/00/10/20/cneur20.html">Euro falls to all-time low against
dollar</A>
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SSUE 1974   Friday 20 October 2000


Euro falls to all-time low against dollar
By David Litterick


THE euro succumbed to fresh bouts of selling yesterday, falling to an
all-time low of 83.95 cents against the dollar in London.

Stronger than expected trade figures in the US and a drop in confidence among
German businesses helped push the currency down 0.84 cents on the day from
84.79 cents at the previous close. It was also not helped by Tony Blair's
comments that the time wasn't "right for Britain to join the euro".

European Central Bank president Wim Duisenberg shrugged off comments made
earlier this week when he appeared to rule out further intervention, saying
it remained "a tool in our toolbox" and reiterated his belief that the euro
was fundamentally undervalued.

He was talking in Paris after announcing the ECB's decision to keep interest
rates on hold at 4.75pc. Acknowledging that eurozone inflation would remain
above the 2pc target for some time he said: "There is a misalignment in the
currency markets and there will come a moment when it will be corrected. We
expect growth to continue above 3pc this year, next year and maybe even the
year after."

He added that he had been under no pressure to resign following his earlier
remarks. Jean-Claude Trichet, Bank of France governor and the man widely
tipped to succeed Mr Duisenberg at the ECB, said the bank's governing council
was "unanimously behind the president".

However, the reassurances yesterday did little to support the embattled euro,
which was hit after the IFO index of German business sentiment dipped for the
fourth consecutive month and unexpectedly strong figures from the US
suggested that its trade gap was narrowing. Against sterling the euro also
fell, closing down 0.14p at 58.22p, although it remains above its historic
low of 57.07p.

Catherine Lee, currency analyst at Royal Bank of Scotland, said: "I have
followed the deutschmark and the euro for more than 10 years and in that time
I have never seen anything like what has happened to this currency. It is
terribly difficult to see what is going to come along to push it up, when
growth in the US next year will still be higher than that in Europe. People
in the City have started referring to the euro as toilet paper."

Stephen Englander of Schroder Salomon Smith Barney said: "Although the euro
was initially depressed by capital outflows out of Europe and into the US,
that has largely dried up. What it is now suffering from is a lack of
credibility."

Analysts said the risk of further intervention had not completely
disappeared, but said that the US economy would have to be in real danger
before it occurred. Mr Englander said: "They couldn't intervene just because
Duisenburg made a gaffe."

Japanese firm OKI, which makes computer printers at a plant in Cumbernauld,
near Glasgow, said yesterday it was shedding 340 jobs because the strength of
the pound was hitting exports to Europe, which accounts for 90pc of the
company's sales.

� Copyright of Telegraph Group Limited 2000

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