Results of Friday’s Euro Intervention to Be Seen

The battle for Europe’s bloodied single currency resumes today when markets test the resolve of the world’s most powerful central banks, whose masters have warned they were ready to repeat their defense of the euro. Market analysts said the Group of 7’s central banks were likely to try to build a base for the euro under 90 cents and ease the memories of recent lifetime lows. They appeared to have won the first round of the intervention scrap with a Friday strike that took markets by surprise, particularly because the U.S. Federal Reserve took part in action that marked only its second sale of dollars in 15 years. A communique issued at the G-7 summit in Prague during the weekend stressed that they were ready to defend world growth from the threat of a weak euro and high oil prices. Speculation is rife the G-7 bankers will be buying again. Analysts say intervention would stand a better chance of success if it were backed up by higher European Central Bank interest rates, which lie two percentage points under the U.S. In early Tokyo trading this morning, the euro rose to 88.08 cents from 87.90 in late New York trading Friday.