-Caveat Lector- from: http://www.iht.com/IHT/TODAY/TUE/FPAGE/bux.2.html Click Here: <A HREF="http://www.iht.com/IHT/TODAY/TUE/FPAGE/bux.2.html">New Doubts On Support Push Euro Downward</A> ----- Paris, Tuesday, October 17, 2000 New Doubts On Support Push Euro Downward Currency Nears Its Low As ECB Leader Seems Hesitant on Intervention ------------------------------------------------------------------------ By John Schmid International Herald Tribune ------------------------------------------------------------------------ FRANKFURT - Europe's common currency slid back toward its record low Monday after Wim Duisenberg, president of the European Central Bank, appeared to cast doubt on the commitment of central banks to intervene anew in support of the euro. The euro slid well below 85 cents in European trading, and at 4 p.m. in New York was at 85.05 cents, down from 85.36 cents late Friday. Its lowest New York closing level was 84.92 cents on Sept. 20. In an interview with The Times of London, Mr. Duisenberg was quoted as saying it would be inappropriate for major central banks to buy euros if the Middle East crisis escalated and unleashed new exchange-rate volatility. The comment was significant mainly because Mr. Duisenberg appeared to be departing from his standard guarded reply to questions about intervention. He has repeatedly said that he would comment on intervention only after it had taken place. That stance was intended to keep traders guessing so that they might not bet heavily against the euro. Asked whether it would make sense to buy euros if ''war in the Middle East'' caused another sharp decline in the currency, the newspaper quoted Mr. Duisenberg as replying, ''I wouldn't think so.'' A spokesman at the central bank's Frankfurt headquarters confirmed that Mr. Duisenberg had made the remark but emphasized that ''it was a hypothetical question.'' Nonetheless, currency markets saw another reason to push the euro back toward its lowest levels since major central banks intervened to support it just over three weeks ago. Then, central banks in the United States, Japan, Britain and Canada jointly purchased euros in a price-support action, briefly pushing it above 89 U.S. cents on Sept. 22. On Monday, prospects that the U.S. Treasury would join a second round of intervention appeared to fade, the market concluded, after the Treasury faced U.S. election-campaign criticism for having supported the euro last month. Lawrence Lindsey, the economic policy adviser for Republican Party candidate, Governor George W. Bush of Texas, criticized the Treasury for joining that intervention. Mr. Lindsey is said to be a likely choice for Treasury secretary if Mr. Bush wins the election. In the newspaper interview, Mr. Duisenberg said the decision to intervene in September had taken into account the fact that intervention may become more difficult for the United States as the Nov. 7 election draws near. Intervention is a perennially hot-button topic whenever currencies are under pressure. Unfortunately for the ECB, Mr. Duisenberg's comments undermined the support that the world's central banks had given the euro. The fear of further intervention had kept traders in check, but Mr. Duisenberg's remarks ''removed some downside protection from the euro,'' said Michael Lewis, an economist at Deutsche Bank. ''The threat of intervention had helped prop it up.'' Economists said such ''slips of the tongue'' from Europe's politicians and central bankers had spurred much of the euro's decline since its introduction Jan. 1, 1999. Only days earlier, Mr. Duisenberg said the euro had stopped falling and was recovering. ''The loss of value of the euro has come to an end,'' he said in a news briefing last week. Inflation data to be released Tuesday also could determine the euro's direction. Consumer prices in the 11-nation euro zone are believed to have risen by between 2.5 percent and 2.8 percent in September from a year earlier, accelerating from the 2.3 percent rate in August, economists have said - well beyond the ECB's 2 percent target rate. In other trading, the dollar was at 108.10 yen, up from 107.87 yen late Friday, and 1.7742 Swiss francs, compared with 1.7715 francs. The pound fell to $1.4479 from $1.4517 ----- 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. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! 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