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| International |
| Euro Hits Record High Versus Dollar |
| 2003-05-27 |
| The euro hit a record high against the dollar at $1.1899 on Tuesday, climbing above the previous record of $1.1886 set on one major trading system on the day of its launch in January 1999, Tokyo traders said. "The euro is keeping its bullish tone from yesterday, especially after the strong Ifo figures," said a dealer at a major Japanese bank. Back to where it was on day one. "But London was on holiday when they were released so I think the market is still trying to catch up," he added. Data released on Monday showed the key German Ifo business climate index rose to 87.6 in May from April's 86.6, beating most analysts' forecasts. Many dealers believe it is only a matter of time before the euro hits the next target of $1.20 now that it has gone above the psychologically important launch-day high. There has been some confusion over the single currency's record with different data providers registering different all-time highs. Traders said electronic broker EBS had registered $1.1886 as the high whereas on Reuters data the peak is $1.1906. Despite the possibility of a near-term pull-back, currency analysts at some major banks have revised up their forecasts for the euro in recent weeks. Some now argue that the attention attracted by the euro's recapture of its launch level and the push to record highs will reinforce its potential to climb. Global portfolio managers may make more allocation shifts into euros as a result of its recent gains, while long term investors including pension funds and insurers are likely to look more favorably on the single European currency, strategists say. In addition central banks — a centrifugal force in foreign exchange markets — may steadily increase euro weightings in foreign exchange reserves. Such shifts could push the euro into a sustained ascent for months, if not years to come, according to some analysts. |
| Posted by:Steve White |
| #8 Interest rates in Europe are much higher than in the US. Hence the movement toward the Euro and its increase in value. But as the Euro continues to climb, the central bank in Europe will be forced to cut interest rates, and soon the US$ will again gain over the Euro. The Euro will continue to rise for a while, until the central bank in Europe acts. So if you have any Euros lying around, this is the time to buy US$. |
| Posted by: RW 2003-05-27 14:53:37 |
| #7 TGA---Come up to Alaska and we will show you around. |
| Posted by: Alaska Paul 2003-05-27 13:44:42 |
| #6 Suppose that spontaneous shopping trip to NY is long overdue! |
| Posted by: True German Ally 2003-05-27 13:14:01 |
| #5 The massive trade deficit indicates we've been living beyond our means. A move downward in exchange rates is just our way of rebalancing the books before we run into a balance of payments crisis. In a world where catastrophic events can happen at any moment (and capital can flee with the press of a button), it seems unwise to rely on foreign investments to balance the books - maintaining an over-reliance on foreign capital could cause significant problems for our economy after moments like 9/11. All the naysayers about this exchange rate move need to put things in context - the debut of the euro several years ago was at 1.18 dollars for each euro. The bottom for the euro was at about .80 dollars for each euro. In effect, the Europeans devalued their currency about 30% against the dollar, before the pendulum swung back the other way. We have only now just reversed the euro's devaluation, and the Europeans are up in arms. I think they need to do the structural things necessary to get their economies in order before they give us a hard time about exchange rates. I do pity the European investment funds that have put money here. On top of the massive losses they incurred by investing money at the top of the Nasdaq bubble, they are now losing big money (30+%) by just holding on to their American securities (both stocks and bonds). On the other hand, if they manage to hold on, I see an inevitable reversal in the exchange rate. However, given that fund performance is reported quarterly, the question is whether the existing portfolio managers will be around for the upturn - pink slips are the inevitable reward for poor short-term performance. |
| Posted by: Zhang Fei 2003-05-27 11:45:11 |
| #4 Good grief, Curt! As always, to get rich you have to buy low and sell high! Get your wine from the U.S. and your other items from the U.S., Mexico, etc. Or you can buy Asian and raise living standards in Asia. But whatever you do, DON'T BUY FRENCH. We need to send them an enduring message. |
| Posted by: Tom 2003-05-27 09:33:15 |
| #3 So, who's who cares about Italian wine ? California has some great vintages. |
| Posted by: Smart Alec 2003-05-27 08:54:50 |
| #2 It may increase our exports, but it reduces Americans' standard of living. You don't get richer if it costs you more American computers to buy Italian wine. |
| Posted by: Curt Simon 2003-05-27 08:40:56 |
| #1 We're driving down the dollar intentionally to increase exports -- at their expense. Beautiful, isn't it. |
| Posted by: someone 2003-05-27 02:22:39 |