Euro Rises Close to Three-Year High Against Dollar, Gold Rises

January 10, 2003

LONDON (10 January) -- The euro rose close to a three-year high against the U.S. dollar in European trading Friday morning as the greenback fell against other major currencies on fears of war with Iraq and doubts about the U.S. economy. Gold prices rose.

The euro hit US$1.0509 in morning trading in Europe, not far short of the three-year high of US$1.0537 reached during trading on Thursday. That was the highest rate for the euro since Nov. 1, 1999, when the 12-country currency stood at US$1.0545.

By late Thursday the euro had fallen back to $US1.0466, still higher than 1.0383 on Wednesday.

The euro has hit a series of multiyear highs over the past weeks, driven by war worries and questions about the U.S. economy and stock markets rather than investors' optimism about the European economy.

When investors move out of U.S. stocks, bonds and other assets into those denominated in other currencies, they must sell dollars to do so -- driving down the dollar's exchange rate.

The euro has risen 22 percent against the dollar since February. The consequences include more expensive European imports and vacations for U.S. consumers, but better conditions for U.S. manufacturers against their European competitors.

Other dollar rates in Europe:

--119.63 Japanese yen, up from 119.55

--1.3866 Swiss francs, down from 1.3935

--1.5510 Canadian dollars, down from 1.5562

The British pound was quoted at US$1.6074, up from US$1.6050.

Gold traded in London at US$353.15 bid per troy ounce, up from US$353.00 on Thursday.

In Zurich the bid price was US$352.93, up from US$351.73.

Gold closed at US$352.00 an ounce in Hong Kong, down US$2.00.

Silver traded in London at US$4.82 bid per troy ounce, down from US$4.84.

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