May 13, 2003	Tuesday	Rabi-ul-Awwal 10, 1424

LONDON, May 12: The euro surged beyond the 1.16-dollar level on Monday for the first time since January 1999 after US Treasury Secretary John Snow suggested at the weekend that a weaker dollar would boost US exports.

The single European currency later slipped a bit in the face of profit-taking and was trading at 1.1562 dollars in late-day deals, up from 1.1489 dollars in New York on Friday.

The dollar stood at 116.88 yen, down from 117.18 on Friday.

The latest spurt in the euro against the greenback was sparked by Snow’s comments, said UBS Warburg strategist Shahab Jalinoos.

“That was just seen as yet another green light for the dollar’s weakness,” he said.

Snow told ABC’s This Week show that a lower dollar “helps exports, and I think exports are getting stronger as a result.”

But on another show on Sunday, he confirmed the Bush administration’s policy to support a strong US dollar.

“We believe in a strong dollar,” Snow said in an interview on Fox News.

He added that the best way to ensure that the dollar regained its strength was to establish strong economic fundamentals.

The US currency eventually found some support during the course of the day here Monday after plummeting to a new four-year low against the euro.

“It’s all profit taking. There were quite sharp movements earlier ... and the market’s now ranging,” Steven Pearson, chief currency strategist at HBOS, said at mid-day.

Rumours that Japanese authorities were intervening to support the dollar against the yen might also have helped the US currency find a temporary bottom, he said.

But analysts had few doubts the current support for the dollar was temporary and predicted that the euro’s rise had further to go.

“My sense is we’ll probably see 1.18 reasonably quickly. This is a fairly painful period for global growth” and US assets are expected to bear the brunt, HBOS’ Pearson said.

European officials are likely to voice dismay at the speed of the euro’s rise, analysts said, adding that their reaction could have an impact on currency movements.

Steve Barrow, strategist at Bear Stearns, noted that the euro’s run-up over the past year had seen periods of rapid appreciation, followed by extended range-trading.

With the attractiveness of European government bonds in the weak global economic environment, the euro is bound to rise further, Pearson added.

Bear Stearns’ Barrow said: “I think maybe we will continue on to 1.20 dollars.”—AFP