131. The value of the euro has fallen progressively
against the US dollar, starting at US$1.18 on 1 January 1999,
and reaching approximately US$0.85-0.86 in early November 2000.
Figures 2 and 3 show its fall.
132. There was concerted intervention on behalf
of the euro on 22 September 2000 by the monetary authorities of
the United States, Japan, the United Kingdom, and Canada.
This temporarily raised the value of the euro to US$0.88 (95 Japanese
yen), but in late October the euro was again trading at US$0.82-0.83.
In early November the ECB intervened three times in under a week,
and by 14 November the euro had risen to $0.86.
133. While the fall in the value of the euro over
the period of less than two years since its launch has drawn a
lot of comment, it is interesting to note that relative to exchange
rate fluctuations over a longer period the recent decline does
not look so remarkable. As Figure 4 below shows, over the period
from 1979 to 2000 the exchange rate between the US dollar and
the ECU (until 1 January 1999) and then the euro (from 1 January
1999) has fluctuated widely, from as high as US$1.40 to as low
as US$0.65. The fall in the euro against the US dollar so far
is less than the fall in the ECUor rise in the dollarbetween
1980 and 1985.
134. The balance of payments figures in Table 6 show
that the euro-zone had a current account surplus from 1997 to
1999, with only a modest deficit in the first half of 2000. The
financial side of the account shows very large outflows of direct
investment and portfolio investment, particularly in 1998 and
1999. But for the first half of 2000 the financial account total
has become positive to the tune of 44 billion euro, and the outflow
of direct and portfolio investment, taken together, has reduced:
it would appear that the export of financial capital from the
euro-zone is slowing. However, at the same time the current account
surplus of the euro-zone has started to fall (as a result of strong
growth and of the rise in oil prices).
Table 6: Balance of payments: euro-zone
| ||Current account
||Errors and omissions