Brussels, 08/07/2002 (Agence Europe) - The sudden weakness of the dollar (which has fallen to its lowest level against the euro in two years) does not seem to be of any great concern to the hundred-odd central bankers meeting in Basel at the 72nd annual summit of the BIS (Bank for International Settlements).
The BIS organises co-operation at global level between central banks and financial authorities. Its members feel that the dollar remains overvalued (above its long-term equilibrium level) while despite its recent rise, they feel the euro is still below its long-term parity level. The central bankers remained extremely prudent, however, since it is very difficult to measure a currency's long-term parity level and neither of the two well-known calculation methods were very exact from a mathematical point of view. The dollar's weakness against the euro is not surprising, argues the BIS, since the situation currently prevailing on the currency markets was unavoidable, given the size of the US trade deficit and its monetary counterpart - the overabundance of dollars outside the US. This situation is perfectly bearable, the BIS members maintain and they are not envisaging any large-scale corrective action in the next few weeks.