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We're ready to trade in new currency, say British banks.

British banks yesterday confirmed they were on track to start trading in euros today. Some analysts warned that sterling could be in for a bumpy ride in the first week of euro trading, but predicted that currency fluctuations could bed down and lead to a weaker pound. This would bring relief to British exporters whose goods would be easier to sell, but bad news for holidaymakers who would get less abroad for sterling. Staff at banks in the City were expected to work throughout last night to ensure that systems run smoothly when banks begin trading in the new European currency for the first time today. A spokesman for NatWest Bank said yesterday: "Tomorrow will be the acid test but we believe everything will go swimmingly." Although Britain is not joining the first wave of the single currency, London is a major international financial centre and cannot afford to ignore the changes. Almost a third of the world's foreign exchange deals are made in London, six times more than in Germany's financial capital, Frankfurt. Mr Peter Letley, managing director of business operations for HSBC Investment bank, said the company was "completely on course" to trade in the euro today. "Most people have finished working and those that are still in are on schedule," he said. International bank Merrill Lynch said its euro preparations were complete. Mr David Kern, group chief economist for NatWest, said currency markets were likely to remain volatile with both the pound and the dollar losing ground to the new euro. But the fluctuations were likely to bed down over the longer term and could result in a weaker pound, bringing welcome relief for Britain's long-suffering exporters. A weaker pound would however be bad news for holidaymakers travelling abroad, who would not be able to buy as many francs or pesetas for their pounds. Expert opinion was divided. Mr Jim Wood-Smith, head of research with stockbrokers Greig Middleton, said that the value of the pound was unlikely to fluctuate wildly over the next week. Although there may be some movement, the euro was likely to remain at around the 70p mark, he said.
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Author:Simon, Emma
Publication:The Birmingham Post (England)
Date:Jan 4, 1999
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