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.