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Euro drops below USD1.25

Published on 16/01/2004

16 January 2004

FRANKFURT – The euro fell to below the USD 1.25 mark for the first time in 2004 on the heels of comments by European Central Bank chief economist Otmar Issing.

In late-morning trading, markets quoted the euro at USD 1.2494 or 80.03 euro-cents per dollar, after the European currency had started the day at USD 1.2561.

Issing said that the ECB had become “disturbed” and was “not indifferent” to the euro’s strong rise of late, a comment which markets apparently took as a further signal that the eurozone central bank could ultimately intervene to help cool the euro off.

It was the second time during the week that the ECB was seen as “talking down” the euro after the bank’s president, Jean-Claude Trichet, said that “steep dollar devaluation” was not a welcome development.

That remark had come after the euro had reached record trading high of USD 1.2897 on 12 January.

After Trichet’s comments, the euro slowly cooled off during the course of the week, with Issing’s remark helping to undercut the European currency further. The latest trading quotation was a full four US cents below its record level of four days earlier.

Subject: German news