Sunday, May 11, 2003

The Man with Feet of Clay Does it Again

This could be one for the record books, 45 minutes after Duisenberg described himself as 'comfortable' with the euro's recent rise the currency broke the $1.11 level and shot up to $1.14, to be closely followed by next months German unemployment figure if things continue this way. Won't he ever learn that if you've got nothing useful to say it's better to keep your mouth wide shut.

The euro jumped to new highs against the dollar on Thursday after Wim Duisenberg, head of the European Central Bank, signalled his ease with the currency's recent strong rally. Earlier, the bank decided to hold interest rates steady.At a press conference following the bank's policy meeting, Mr Duisenberg said the euro was now trading around its historical average and that its current levels were therefore not excessive.The single currency leapt to a high of $1.1486 against the dollar, breaking decisively through its previous high of $1.1437, as Mr Duisenberg made the comments. The euro was at $1.136 ahead of the decision.Mr Duisenberg struck a relatively hawkish note at the conference giving further support to the euro. The bank head said current monetary policy was conducive to stability in the medium term and that the ending of war had removed many of the downside risks to the economy. Economists had expected a more dovish speech to prepare the market for a rate cut at the ECB's next meeting in June.
Source: Financial Times

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