Euro dives as Duisenberg rules out co-ordinated intervention

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The Independent Online

The euro tumbled to within a whisker of its all-time low against the dollar after the president of the European Central Bank played down the chances of another co-ordinated intervention to prop up the currency.

The euro tumbled to within a whisker of its all-time low against the dollar after the president of the European Central Bank played down the chances of another co-ordinated intervention to prop up the currency.

Wim Duisenberg's remarks stunned the financial markets. At one point the single currency fell as low as $0.8467 against the dollar, just above the record low of $0.8440 it hit on 21 September - a day before the ECB, the US Federal Reserve and the Bank of Japan waded in to the market to buy euros.

Asked in a newspaper interview whether it would make sense for central banks to intervene if a war in the Middle East triggered a sharp change in currencies, Mr Duisenberg replied, "I wouldn't think so."

"You have to admire his honesty if nothing else," said Peter Dixon, European economist at Commerzbank in London.

"He is right that if the euro is under pressure from external forces it won't do an awful lot if central banks intervene - but his timing could be better," he said.

Mr Duisenberg's comments compounded growing speculation among traders that consensus among central banks for further intervention is fading. "The markets have lost their fear of intervention - and that's not good," said another analyst.

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