June 23, 2002	Sunday	Rabi-us-Sani 11, 1423

PARIS, June 22: As the euro steadily climbed against the dollar last week, experts were increasingly predicting a return to the early days of the currency, when it was trading at more than a dollar.

On Friday the 12-nation single currency, which was launched as a tradable unit on January 1, 1999, broke through the 97-cent barrier for the first time in two years. In the early days of its existence the unit at one point traded at 1.17 dollar, and for much of last year it was trading in the 80-cents range, with a low point of 83 cents.

With the announcement of an increase in the US balance of payments deficit on Thursday coming on the heels of continuing falls on Wall Street, the euro looked as if may maintain its climb against the US currency.

“The dollar’s weakness is essentially caused by falls on US financial markets,” an economist at the leading French bank Societe Generale said, adding that foreign investors were choosing Europe and Japan rather than the US for their investment funds.

Such a situation meant that it was now only a question of time before the euro broke through the psychologically significant parity mark, the economist said.

Bullish euro optimists notwithstanding, most financial experts were prepared to say that the reason behind the euro rise was down to the generally negative view of the US currency rather than any specifically positive view regarding the euro.

That appeared evident this week with the dollar experiencing similar falls against other major currencies including a drop to its lowest level for seven months against the Japanese yen.

“Everything is focused in on the plight of the US economy at the moment,” said Commerzbank economist Kamal Sharma.

“As long as the focus remains on the US equity markets and concerns on the US current account deficit and doubts over the long-term strength of the US economy, I think data from the likes of Japan, Europe and the UK will be largely ignored,” he told AFP Friday.

Even a steep fall in French household expenditure on manufactured goods in May failed to dent enthusiasm for the euro on the financial markets.

However, US Treasury Secretary Paul O’Neill did try to keep a brave face as he played down fears of continuing falls in the dollar rate.—AFP