LONDON, 22 January 2004 — The euro slipped back from session highs in late trade yesterday after French Finance Minister Francis Mer described currency markets as being in an “unhealthy” state, analysts said. The single European currency nonetheless traded at 1.2629 dollars from 1.2582 late on Tuesday in New York. The dollar was being traded at 106.78 yen against 106.99.
“It highlights the sensitivity regarding the strength of the euro,” said Kamal Sharma, currency strategist at Dresdner Kleinwort Wasserstein in a comment on Mer’s remarks. The French minister had also said that eurozone finance ministers had no difficulty in deciding on their joint statement on currency movements on Monday, and that this position was taken “in total association” with the European Central Bank (ECB).
Rather than talking about the level of the euro, the ministers expressed their concern about excessive exchange rate moves and urged stability. The markets took that message to renew their euro buying.
Earlier in the session, the euro was on the front foot on a growing belief that the ECB is not yet ready to conduct actual intervention or to change interest rate policy.
Meanwhile, sterling regained further ground against the dollar as expectations of another Bank of England rate hike next month increased in the wake of the minutes of the last rate-setting meeting.
The euro was changing hands at 1.2629 dollars from 1.2582 late on Tuesday, 134.81 yen (134.64), 0.6894 pounds (0.6911) and 1.5679 Swiss francs (1.5688). The dollar stood at 106.78 yen (106.99) and 1.2418 Swiss francs (1.2466). The pound was at 1.8317 dollars (1.8198), 195.57 yen (194.70) and 2.2743 Swiss francs (2.2688).
On the London Bullion Market, the price of an ounce of gold stood at $411.25 against $409.25 late on Tuesday.
