Det tappra kronförsvaret - The brave defence of the Pound
Febrila eurosamtal på måndag
DI 2000-05-06
Eurons ras har lett till febril aktivitet i EMU-länderna inför måndagens ordinarie euro-11-möte för finansministrarna. Bland andra Frankrike, genom premiärministern Lionel Jospin, vill få till stånd ett internationells samarbete till stöd för euron.
Behovet av att agera anses ha ökat. Finansministrarna får på måndagsmorgonen överväga om de ska göra ännu ett gemensamt uttalande till stöd för euron. Frågan blir då hur de denna gång ska hitta ett ordval som slutligen övertygar finansmarknaden om att euron är undervärderad. Samtidigt medger källor i centralbankerna att det överraskande kraftiga fallet i veckan har fört Europeiska centralbanken allt närmare interventioner.
Lionel Jospin sade på torsdagen att volatiliteten skadar alla, underförstått också USA och Japan. Därför bör "ett kollektivt svar från de stora monetära blocken övervägas", sade han.
ECB representeras vid det månatliga euro-11-mötet denna gång av vicechefen Christian Noyer. /och inte av Trichet, som hotas av åtal/
Nervositeten uppges ha spridit sig också till ECB, där tidigare misslyckanden har ökat osäkerheten om vilka åtgärder som verkligen skulle bita.
På fredagen försökte ECB-chefen Wim Duisenberg lugna oron genom att säga att ECB gör allt den kan för att bevara prisstabiliteten och därmed värdet på deras besparingar och pensioner. Därför följer ECB eurokursen mycket noga, förklarade han.
From FT, May 5, 2000
The European Central Bank on Friday moved to shore up public support for the sagging euro, vowing to do all it could to keep prices stable.
In an unscheduled and unusual statement, Wim Duisenberg, the central bank's president, told citizens in euro-zone countries that the euro would remain a stable currency.
His appeal to the public rather than to foreign exchange markets was seen as a sign of growing concern that the euro's slide was becoming a political problem. There have been increasing signs of public dismay in some European countries at the euro's slump and some political leaders fear public confidence in monetary union may be undermined.
There was further support for the euro from Christian Noyer, the bank's vice president, who said the euro's current exchange rate was "ridiculous". Referring to intervention in the foreign exchange markets, he said: "It is a tool in our hands when we deem it appropriate."
Analysts said the comments would feed speculation the bank was considering intervention in the markets or an interest rate increase in an attempt to stem further depreciation in the euro.
The statements came the day after the euro touched a new low against the dollar of $0.8843, a fall of almost 25 per cent since its launch at the beginning of last year.
The currency's sharp decline prompted calls from Lionel Jospin, the French prime minister, for international action to prop up the currency and warnings in the German press that the German public was losing faith in the euro.
Verbal support for the euro from senior policy makers has become more strident over the past few days. A statement on Thursday by Jean-Claude Trichet, governor of the Bank of France, that market participants should beware of the potential for euro appreciation was seen by many as a veiled threat of intervention.
Soros Recommends ECB Intervention To Support the Euro
From FT, May 4, 2000
Lionel Jospin, France's prime minister, on Thursday called for international co-operation to prop up the euro, amid signs that patience with the currency's slide is wearing thin. Speaking during a visit to Hungary, Mr Jospin said he was unhappy with the level of the currency which he said failed to reflect the strength of Europe's economies.
Volatility in the major currencies, he said, was bad for everyone. In an implicit appeal for assistance from the US and Japan, he said "a collective response from the large monetary blocs should be considered".
Mr Jospin also called for greater co-ordination between euro-zone countries over the currency.
His criticisms of the foreign exchange markets were echoed by Jean-Claude Trichet, governor of the Bank of France, who said: "I am profoundly convinced that market participants will realise with our help that the present rates are out of line with fundamentals and, therefore, the potential for appreciation for our currency will rapidly materialise."
"Intervention is certainly seen as more likely than it was a few weeks ago," said Avinash Persaud, global head of research at State Street, the Boston-based investment bank.
"The euro's tumble is beginning to be seen not just as a threat to price stability and investor confidence but also to public confidence."
But many observers believe intervention remains a remote prospect. Recent comments by other euro-zone policy makers suggest it could be hard to marshal a consensus for market action.
Ernst Welteke, Bundesbank president, said this week that intervention "is always problematic and it is very doubtful whether it can be successful against the market trend". He added that he doubted whether the US would want to participate.
Analysts are not ruling out the prospect of a statement of concern over the euro's slide from the Group of Seven leading economic powers at their next meeting in July.
Romano Prodi, the president of the European Commission, tried to play down the euro's woes, holding out the prospect of a strong euro causing problems for the European Union.
"When the euro is higher, higher and higher, then we shall have a lot of problems," he said.
