Officials Try to Talk Euro Into a Rebound --- Currency Slips to New Low; ECB Member Renews Discussion of Intervening
European officials tried to talk up the euro after it hit a new low against the dollar in European trading. But the jawboning -- including renewed talk of intervention from one European Central Bank official and a suggestion from a finance minister that the euro could rise 20% -- did little to spur markets to bid up the struggling common currency.</br></br>In late New York trading yesterday, the euro stood at 82.94 cents, just above its record low of 82.28 cents earlier in the day. Currency-market traders said officials' silence on the euro after a Group of 20 meeting in Montreal prompted the euro's slide to the new low.</br></br>"The ECB will do all it can to achieve its objective of price stability, without excluding the possibility of intervention," said Eugenio Domingo Solans, an ECB executive board member, in Madrid. Mr. Domingo said the solid state of the European economy will "sooner or later" cause the euro to rise.</br></br>The weak euro is at the root of inflation in Europe, and doesn't help the economies of the U.S. and Japan either, Mr. Domingo added. Last month the ECB, the U.S. and Japan intervened in the currency markets to prop up the euro, which initially rose but has fallen further in the past two weeks because markets doubt the U.S. would be willing to intervene again before the presidential election. In a sign of how sensitive markets are to the threat of intervention, the euro rose to its high for the day after Otmar Issing, the ECB's chief economist, reiterated what has become the central bank's party line: Intervention is a tool at the bank's disposal.</br></br>Laurent Fabius, France's finance minister, stated the euro has the potential to rise 20%. "On the whole, Europe is in a positive position. We are not managing to get that across," Mr. Fabius said in Paris. The strong performance of the U.S. economy and perceptions of an inflexible, rigid Europe have contributed to the euro's 29% slide against the dollar since it was founded in January 1999.