Finance ministers of the euro zone spoke in support of the single currency at their Versailles meeting on Friday. But the statement was immediately labeled by the market as too bland and non-committal.
"The euro group and the
European Central Bank
reiterate their common concern that the current level of the euro does not reflect the strong economic fundamentals of the euro area," the statement said. But there was no intervention.
The market reacted with predictable disappointment, and the euro fell to a new all-time low at $0.8560. It is now opening at $0.8605, well below last week's low of $0.8635.
"It's offered and there's no sign of intervention as yet," said Ian Wilke of
in London. " It will remain offered until they intervene."
The euro is now a stunning 27% down against the dollar from its launch in January 1999.
The dollar is in demand everywhere. Dollar/yen is higher at 106.20, despite better-than-expected second quarter economic growth in Japan. April-June
rose 1.0%, beating expectations of a rise of 0.7%. Japan's Economic Planning Agency head,
, gave a downbeat assessment of the economy and indicated that personal spending and capital investment were still a concern.
The euro's losses against the dollar are exceeded by its fall in yen terms. At the New York opening, the euro is valued at 91.45 yen and has barely rallied from new record lows at 90.85. Over its life, the euro has dropped 31% against the yen.
Sterling has also lost ground to the dollar and is opening at $1.4165, after seeing lows of $1.4090 compared to Friday's close at $1.4200.The pound was weakened by a surprising drop in U.K.
in August. Output prices fell 0.3%, compared with an expected rise of 0.2%.
The forex market interprets this decline as another indication that U.K. interest rates will not move higher in the near term.
" The pound has strengthened a little," said George Buckley of
, "but the retail price index comes out later in the week." Buckley sees the pound's fortunes tied to evidence of price movements in the U.K.
The Swiss franc is lower against the dollar at 1.7745. The euro/Swiss franc rate is about 1% weaker, at a new all-time low around 1.5280.
The Canadian dollar, as usual is on the sidelines around Friday's close at C$1.4770.
The Australian dollar is steady around $0.5580, with some concern over the possibility of intervention if the Aussie slides again.
Reserve Bank of Australia
said he was surprised the Aussie was so weak. " It is surprising that in an economy showing the medium-term characteristics I have just outlined, the exchange rate is so weak," he said to a conference in Melbourne.
The New Zealand dollar edged higher to open at $0.4225.
Elsewhere, the euro's weakness has hurt related emerging market currencies. The Polish zloty is down to 4.43/dollar, and the South Afrrican rand is at 7.13/dollar.
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