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The whir and roar of the booming gold business in India
By Stella Dawson
Reuters
Friday, December 3, 2004
http://www.reuters.com/newsArticle.jhtml?
type=reutersEdge&storyID=6991223
FRANKFURT -- European leaders are worried about
the tumbling dollar but have not agreed to fire their
cannon of foreign exchange intervention yet, senior
officials of European governments said on Friday.
The coming week could prove important for putting
together pieces of any program for Europe to tackle
a dollar rout that could upset the global economy --
European Union finance ministers meet and
Germany's leader heads to Asia.
But any possible action appears to remain further off
despite the euro hitting a new record high on Friday
at $1.3388. Intervention, or buying dollars in the
currency markets to stop the euro's rapid ascent,
should take place only in "exceptional circumstances"
and now was not the right time, senior German
government sources said on Friday.
"The exchange rate should be determined by the
markets. Not everything should be controlled by the
government," they said.
Another senior euro zone finance ministry official
told Reuters late on Thursday that euro zone finance
ministers had "absolutely not" instructed the European
Central Bank to intervene in the foreign exchange
markets.
"No scenario of joint foreign exchange intervention
has been discussed" by finance ministers, the official
said. But he added that European heads of government
are "very concerned" about euro strength.
One deputy finance minister told Reuters on Thursday
that European and Japanese officials were discussing
the currency options for addressing the falling dollar,
but he added that no specific intervention plans were
currently on the table.
Worries over the dollar are likely to be voiced when
euro zone finance ministers meet on Monday for their
last Eurogroup session of the year with ECB President
Jean-Claude Trichet.
Their current chairman, Dutch Finance Minister Gerrit
Zalm, said on Thursday that the impact of a rising euro
on the 12-nation region probably would be on the
agenda. He declined to say whether they would discuss
joint FX intervention.
The ECB does not require Eurogroup approval to jump
into foreign exchange markets since finance ministers
only give general direction on foreign exchange issues.
But in the interests of political niceties, the ECB usually
would consult before acting.
Japanese authorities have suggested they may be close.
"Conditions are in place for Japan and Europe to be able
to take harmonised action," Hiroshi Watanabe, Japan's
vice finance minister for international affairs and their
lead official on foreign exchange, said on Wednesday.
Also next week, German Chancellor Gerhard Schroeder
heads to China and Japan -- countries that are under
pressure to allow more flexible exchange rates.
Ahead of that trip, German government officials said that
Berlin is in constant contact with its partners in the Group
of Eight major industrialized nations on currency issues
and that getting Asian currencies to fluctuate more freely
would be desirable.
European governments in the past week have been voicing
mounting concern about the dollar's plunge, which sent the
British pound to a 12-year high this week above $1.94 as
well as the euro to fresh records.
Britain's Chancellor of the Exchequer Gordon Brown,
rarely one to fret about currency values, said on Friday
that foreign exchange movements are adding to the risks
faced by the global economy.
"There is an amount of uncertainty. Oil prices have
doubled. We've got these exchange rate imbalances
between the euro and the dollar. We've still got a great
deal of political uncertainty," Brown told Reuters in
an interview.
It was quite unusual for the powerful British treasury
chief, a firm believer in free markets, to comment for
the second time in a month on currency risks and it
comes ahead of Brown taking the leadership of the
Group of Seven finance ministers and central bankers
meetings for next year.
The Spanish and Italian prime ministers earlier this week
also said that the euro rise was damaging exports and
should be discussed by European Union leaders.
Schroeder in November expressed similar concerns.
As for ECB policymakers, they are sticking firmly to
script to discourage disorderly markets and stress the
G7 statements.
ECB Governing Council member Guy Quaden of
Belgium said on Friday that Europe is bearing the
brunt of global economic imbalances, and gave the G7
position as the remedy.
"Asian countries, their foreign exchange policy must
become more flexible. ... The U.S. must reduce its
current deficit and the first thing to do is to reduce its
budget deficit."
"Europe must help. With the foreign exchange rate, we
have already made a large contribution, but we must
raise growth," Quaden said.
Asked about the euro's rise, Austrian central bank chief
Klaus Liebscher said: "This development is not
welcome." He declined further comment.
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----------------------------------------------------
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Michael Kosares, Proprietor
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info@mocoin.com
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15018 North Tatum Blvd.
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1-800-BUY-COIN
FiGoldstein@swissamerica.com
----------------------------------------------------
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