Display mode (Doesn't show in master page preview)

30 May 2005

K-Social

As for the UK currency, sterling rose against

คะแนนเฉลี่ย

Last week, the euro plunged against most major currencies in the wake of French and Dutch rejection of the EU constitution which threw the bloc into political disarray. Meanwhile, sterling eased gradually on a stronger dollar and signs of slowdown in British economy. Gold, on the other hand, recovered late in the week on a short-covering rally.

The euro continued to fall early last week after French voters rejected the proposed European Union constitution, casting a shadow over the political future of the bloc. The "No" vote garnered 55%, higher than most polls suggested before May 29's referendum, in one of the biggest turnout for years. It did raise questions about public support behind the EU and future integration. It also plunged France into political turmoil just a week after Germany's Chancellor Gerhard Schroeder called for early elections after his party suffered humiliation defeat in a regional poll. France's rejection of the EU treaty had thrown the euro zone into a political crisis that would weigh on the currency and regional financial markets. Thus, weak growth, political problem, and a 'no' vote in the referendum showed there was not much positive news out of the euro zone.

Besides, the euro was also depressed as France's rejection of the EU constitution sparked worries about reform prospects in Europe. The euro zone needs deep reforms because of its anemic growth and low confidence. In response, French President Jacques Chirac named Dominique de Villepin as the new Prime Minister. Villepin was seen as a Chirac loyalist who is unlikely to reintroduce reforms.

In the middle of the week, the euro dropped further to eight-month lows against the dollar after an exit poll showed a firm rejection of the EU treaty by the Netherlands. Also weighing on the single currency was reports that possible failure of the European Monetary Union was discussed at a meeting attended by high level German financial officials. The report in Stern magazine compounded market concerns about stability in the euro zone. The Dutch opposition to the EU charter has been driven in part by dislike of the euro, while the French voted against the constitution partially because of concerns its would become a threat to social protection. The euro, however, recovered slightly late in the week as investors booked some profits ahead of US economic data.

The euro slid to $1.2160 on June 1 from $1.2477 on May 30. Against the yen, the greenback steadied around 108.01 yen and 108.25 yen on May 30 and June 2, respectively.

As for the UK currency, sterling rose against the euro after French and Dutch voters rejected a proposed European Union constitution. Britain's position outside the euro zone made sterling an attractive place to ride out short-term volatility in the wake of the vote. But the pound turned lower versus the dollar as the latter soared to 8-month high against the euro. Besides, signs of weakness in UK's economy also undermined the pound. Since the start of the year, the British unit has fallen more than 5% against the $ but is up around 3% against the euro. Sterling dipped to $1.8083 on June 1 from $1.8236 on May 30 before edging up to $1.8159 on June 2.

On the bullion market, gold sank to its lowest level in almost 4 months as the euro tumbled against the $ due to the EU constitution's turmoil. However, losses in gold were limited later by physical business, particularly in India for wedding gifts, coming in at the lower levels. Besides, gold rebounded rapidly late in the week following the euro's recovery. A stronger euro against the $ makes dollar-priced gold cheaper for non-US investors. Gold rose to $422.60 an ounce on June 2 from $416.40 an ounce on May 31.

View full article


K-Social