Frankfurt, 14/09/2000 (Agence Europe) - On Thursday, the European Central Bank announced it would begin that same day to sell up to the equivalent of EUR 2.5 billion in currency to buy euros - the sale of interest income of the foreign reserve assets invested by the ECB (essentially in US dollars but also in Japanese yen), states an ECB press release. It also points out that the Federal Reserve and the Bank of Japan "have been informed of these planned foreign exchange operations". The Bank (which has left its interest rates unchanged) states that the sale will be "spread over a number of days".
The ECB recalls in its press release that, since its creation in 1999, it has held in its own name reserves in foreign currencies of a value, at the time, of some 39.5 billion euro, 15% of which in gold (this had been transferred to the European Central Bank by the central banks of the eurosystem, in compliance with Article 30 of the Statutes of the ECB). The bank says that the interests gained through its payments have allowed for the volume of foreign currencies to increase by over 2.5 billion euro, and recalls that, at its 31 August meeting already, it had decided that it would sell the amounts stemming from these operations.
The ECB spokesman said in Frankfurt that this transaction was not an intervention in view of supporting the euro, as "the amounts involved are too small". Remains that the euro's quotation was down Thursday afternoon.
Duisenberg confirms it is not an operation to support the euro
During the press conference that followed the meeting of the ECB Governing Council, Wim Duisenberg, ECB President, repeated that the euro's exchange rate does not seem appropriate if one looks at the fundamental economic factors. The purchase of EUR 2.5 billion following the sale of interest income since early 1999 is not intervention to support the European currency. The operation (envisaged for 31 August) was announced on Thursday solely for "tactical" reasons linked to the market situation.
Mr Duisenberg seized the opportunity to invite the governors once more not to relax their budgetary policies, mainly following the rise in oil prices, and trade unions not to try to offset this rise with excessive wage demands that would bear heavily on the favourable growth prospects (Mr Duisenberg repeated that the prospects of growth in the euro zone remain positive, and that growth should remain above 3% next year).
In answer to questions on the Danish referendum to be held on 28 September on the euro, Mr Duisenberg felt that a victory by the no votes in this referendum would have a "negligible" impact on the economy of the euro area. He added: "I would be pleased to convince the Danes that the prospects for single currency are positive, and that it is worth their while joining".