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Euro gets central bank lift
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June 18, 1999: 9:23 a.m. ET
Bank of Japan asks European banks to halt rise of yen
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LONDON (CNNfn) - The euro rebounded sharply against the yen and dollar Friday after the European Central Bank confirmed it had sold yen and bought euros to prop up Europe's ailing single currency.
The ECB acted on behalf of the Bank of Japan, which has become increasingly concerned by the yen's strength against the fledgling European currency.
Central banks in Europe intervened after the euro hit a new low of 122.60 yen overnight. Rumors of intervention started a sharp rise in the euro, and it surged above 125 yen.
Against the dollar, the euro rose to $1.040, up from the day's low of $1.0295. With the central banks flooding the forex markets with yen, the dollar-euro rate is being pulled up by arbitrageurs as the currency cross-rates move.
"They chose a nice quiet Friday to intervene," said David Bloom, currency strategist at HSBC in London, "there's no economic data out today, and the markets are rolling along nicely," he added.
Japanese officials are concerned that a too-strong yen would choke off a tentative recovery in the country's beleaguered economy by making exports excessively expensive.
"The euro/yen rate was close to its lows of August 1997," said HSBC's Bloom, referring to the period when the euro's forerunner - the ecu - was traded in currency markets.
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