Euro languishes in Tokyo trade on Chirac comments

Published October 24th, 2000 - 02:00 GMT

The euro was trading close to its record low against the dollar here Tuesday after dealers took comments by French President Jacques Chirac as signaling a lack of concern about its weakness. 

 

The common European currency traded at $0.8368 around 2:00 pm (0500 GMT), against $0.8358 in New York but down sharply from $0.8406 in Tokyo late Monday. 

 

The euro reached its record low of $0.8330 on October 18. Since its introduction in January last year, the currency has lost almost 28 percent of its value against the dollar.  

 

"The euro is not an element of concern for us, and we don't have the feeling that it was an element of concern either for the Chinese premier" Zhu Rongji, Chirac said in Beijing after talks with Zhu on Monday.  

The French president was in fact expressing confidence in the euro's prospects, but traders gave his comments a different interpretation.  

 

"Yesterday French President Chirac made a comment which was negative to prospects of intervention, saying he was not worried about the current euro level, which caused investors to sell the euro," Fuji Bank dealer Wako Ogawa said.  

 

Mizuho Trust and Banking dealer Kazuhiro Kaneko said: "Yesterday Chirac said he was not worried about the weak euro. This was the reason why investors sold the euro."  

 

The Chirac comments came after European Central Bank president Wim Duisenberg was forced on to the defensive over an unfortunate press interview in which he all but ruled out euro intervention soon. 

 

"Dealers just watch the headlines without reading such comments in their context," said Bank of Tokyo-Mitsubishi dealer Kiyoshi Kuzuhara. 

 

"Investors who had bought the euro on hopes of more intervention could not help selling the euro on that news (Chirac's comment), because the euro was finding it difficult to rise," he said. 

Singapore bank DBS Group said it still believed the European Central Bank was likely to step in to prop up its beleaguered currency. 

 

Euro-zone September money supply data was likely to fall after a series of rate hikes, the bank said. 

"All these point to a peaking of growth and the market will sell the euro," it said. 

"We remain hopeful of an intervention." 

 

The euro was also sliding against the yen after Japan's finance ministry announced Monday it would sell one million shares in former state monopoly Nippon Telegraph and Telephone Corp. (NTT). 

The euro bought 90.52 yen around 2:00 pm, compared with 90.55 in New York and 91.64 in Tokyo Monday afternoon. 

 

"European investors sold the euro and bought the yen because NTT shares will be issued," Fuji Bank's Ogawa said. 

NTT itself will issue 300,000 new shares, the finance ministry said, with applications from investors accepted from Tuesday to Thursday. 

 

The sale of new shares will help finance NTT's acquisition of US web-hosting firm Verio Inc., resulting in the government's stake in the former state monopoly falling as low as 46 percent. 

The dollar meanwhile bought 108.24-27 yen, down from 108.30 yen in New York and 109.01 yen in Tokyo late Monday. 

 

"Investors are waiting to see earnings releases today by US companies including (online retailer) Amazon.com and (computer firm) Compaq," Ogawa said.— (AFP)  

 

© Agence France Presse 2000  

© 2000 Mena Report (www.menareport.com)

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