The Euro Luge
Leander, Tom, Global Finance
Behold the falling euro. As of this writing (April 20) the euro slipped to a lifetime low of $1.0589, helped along by the uncharacteristic nonchalance of European Central Bank governor Wim Duisenberg. On April 19 Duisenberg told European lawmakers at a news conference, "Not having an exchange rate policy and we do not have one - does not mean there is benign or malign neglect For the time being there is neglect." Currency traders responded by sending the euro further into its luge-like descent.
Driving the euro's decline is the relative weakness of the economies of the nations in the European Economic and Monetary Union compared with the United States growth engine.After a brief period of"europhoria," good news about the US - starting with the announced 5% rise in the US GDP last January, later revised to 6% - has sent the currency into a steady decline.Analysts cite other causes: Japanese investors, who had been pumping money into Europe have started pulling it out. Japan's economic distress has as much to do with the pullback as a reduced business confidence in Europe. …