Jitters over new intervention as euro bounces

by JANE PADGHAM Intervention jitters rippled across the foreign exchanges today after the euro bounced against other major currencies in early dealings. No European Central Bank buying was detected and short-covering was blamed for the rally, which saw the single currency surge more than half a cent to 85.70 and to 60.15p against the pound. But the sudden euro movement spooked the market and reminded dealers that Friday is often favoured as the best day to intervene.

Kit Juckes, currency strategist at Royal Bank of Scotland, said: 'Everyone knows it's a Friday and the ECB doesn't like the euro below 85 cents. The past few weeks have established beyond reasonable doubt that investors have no confidence in the euro and it is only a matter of time before we see another run-in between the market and the ECB.'

The euro yesterday fell to its lowest levels since the ECB first intervened on its own two weeks ago. Its failure to capitalise on the US political mayhem and market turbulence reflected the appalling market sentiment towards the single currency, analysts said.

Juckes said the gaps between bouts of ECB intervention were too long to make the action effective, and it had failed to push the euro high enough to cause pain to short-positioned investors.

But ECB vice president Christian Noyer insisted that the success of intervention could only be judged in the long term.

http://www.thisislondon.co.uk/dynamic/news/business_story.html?in_review_id=336179&in_review_text_id=279496

-- Martin Thompson (mthom1927@aol.com), November 17, 2000