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LONDON, Oct 13: The euro stumbled against the dollar on Monday after outgoing European Central Bank president Wim Duisenberg said a call by the G7 group of rich nations for more flexible exchange rates was aimed at Asian currencies rather than the euro-dollar.
The single European currency dropped to $1.1665 from 1.1796 late on Friday in New York.
The euro stood at 108.72 yen compared with 108.69 on Friday.
Trading was quieter than usual, with the United States and Japan enjoying public holidays, though the US stock market was to open.
The euro’s soft because Duisenberg is talking it down but it probably won’t last, said Paul Bednarczyk, currency strategist at economics consultancy.
Duisenberg said in an interview in the Italian newspaper Il Sole 24 Ore on Sunday that the values of Asian currencies did not reflect these countries’ economic expansion.
Our impression, that was reflected in the September G7 statement, is that a greater flexibility is needed in foreign exchange, he said.
This greater flexibility is not so much to do with the euro-dollar link, but with the exchange regimes adopted by a lot of Asian countries, he said.
Dealers were also looking ahead to US President George W. Bush’s visit to Japan on Friday given the sharp recent rise in the yen against the dollar.
The consensus in the foreign exchange market is that the yen could appreciate this week as the Japanese authorities refrain from intervening ahead of the visit, given the calls from the United States included in the G7 statement that greater flexibility in foreign exchange rates is needed to adjust global imbalances, said Derek Halpenny, economist at the Bank of Tokyo-Mitsubishi.
The euro was changing hands at $1.1665 from 1.1796 late on Friday in New York, 126.89 yen (128.15), 0.7046 pounds (0.7086) and 1.5478 Swiss francs (1.5490).
The dollar was being quoted at 108.72 yen (108.69) and 1.3265 Swiss francs (1.3131).
The pound was at $1.6563 (1.6635), 180.06 yen (180.71) and 2.1976 Swiss francs (2.1850).
On the London Bullion Market, the price of an ounce of gold was at $371.45 against 372.30 on Friday afternoon.
MUMBAI: The Indian rupee ended weak, and off intra-day highs, on Monday, amid sporadic bids from corporates and dollar demand from Haj pilgrims.
They added this might have led to a bout of dollar purchases by banks which had earlier expected the rupee to gain.
The local currency ended at 45.41/42 per dollar, off the day’s high of 45.33 and Friday’s close of 45.3850/3950.
It is still up 5.7 per cent since the start of the calendar year on the back of surging inflows from expatriate Indians, trade and foreign investors.
Offshore funds have added a net $3.55 billion worth of Indian shares to their portfolios in 2003, nearly fives times what they bought in all of last year. Analysts expect them to step up investments on expectations of better corporate earnings.
Forwards reflect interest rate differentials between India and the US and factor in the rupee’s outlook. They trade at a premium as India’s interest rates have been higher than the United States and due to capital controls.—Reuters
