Skip navigation
Watchlist Sponsored By :

Current DateTime: 04:43:31 07 Oct 2008
LinksList Documentid: 24355697

Current DateTime: 04:43:31 07 Oct 2008
LinksList Documentid: 24890560
  • Protecting Your Portfolio

      Credit Crunch. Recession. Bear Market. There's a triple threat out there for investors. Here's a guide to managing your money.

  • Struggle at AIG

      The Federal Reserve comes to the rescue again with a $85-billion loan package to help shore up the giant insurer'sfinances in the the face of a possible chapter 11 bankruptcy filing.

  • Wall Street In Crisis

      Wall Street was badly shaken Sunday by the failure of Lehman Brothers, the takeover of Merrill Lynch and big asset sales by AIG.

Talk of Euro Intervention Intensifies
By Antonia Oprita, Associate Web Producer | 05 Dec 2007 | 11:14 AM ET
Text Size

Verbal intervention to try to stop the euro's advance is all that exporters will get for the moment, but if the going gets tough things may change, analysts say.

Exchanging Dollars and Euros
It would not be a first for the euro, which in its early stages had to be propped up against the dollar to prevent a loss of confidence eroding the then-new currency's status.

In September 2000 the ECB intervened jointly with U.S., Japanese, UK, and Canadian authorities to halt the single currency's fall, and the euro, which was hovering around its record low of $0.84, shot up above $0.90.

It had lost as much as 28% of its value against the U.S. dollar since its launch in January 1999.

Speed is the Issue

But a similar decision to reverse the dollar's plunge will not be taken lightly and for the moment markets have to content with U.S. Treasury Secretary Henry Paulson's mantra of favoring a strong dollar.

"(Intervention) has to do with the speed of the depreciation," Erste Bank’s Veronika Lammer told CNBC.com. "I do not think (the ECB) would cut the interest rates as long as the dollar is in a normal stage."

The dollar has lost around 20 percent of its value against the euro in the past two years.

An intervention like the one in the early stages of adopting the euro, when the single currency fell too fast against the dollar, was likely to be considered if the greenback's depreciation quickens, Lammer said.

"They would intervene together with the Fed if they feel there would be loss of confidence in the US dollar. They would buy dollars on a coordinated basis," she said.

  More from CNBC.com

© 2008 CNBC.com

HOME  |  NEWS  |  MARKETS  |  EARNINGS  |  INVESTING  |  VIDEO  |  CNBC TV  |  CNBC PLUS  |  CNBC MOBILE  |  CNBC HD+
About CNBC   |   Site Map   |   Privacy Policy   |   Terms of Service   |   Advertise   |   Help   |   Feedback   |   Video Reprints
  Data is a real-time snapshot   *Data is delayed at least 15 minutes

Global Business and Financial News, Stock Quotes, and Market Data and Analysis