Investment capital again poured into the euro zone in November but at a slightly slower rate than the previous month in flows that helped fuel the euro's rocketing rise against the dollar.
The euro zone saw an inflow of combined net direct andportfolio investment during November of €13.6 billion, onlyslightly slower than the October inflows of €14.4 billion,European Central Bank (ECB) data showed today.
In the past, analysts blamed strong capital outflows fromthe euro zone for the euro's persistent weakness against thedollar. The reversal of this trend from the second quarter last year has contributed to the common currency's recovery.
The euro climbed above parity with the dollar in Novemberbut fell back below $0.99 towards the end of the month. It then started rallying strongly again from early December to hit a three-year high above $1.09 at the start of this week.
The ECB said the net investment inflows in Novemberreflected direct investment inflows of €3.9 billion andportfolio investment inflows of €9.7 billion.
"One of the salient features of the euro area financialaccount in November was the substantial net inflow of €16.1billion into equity portfolio investment," the ECB said.
Cumulative data showed the outflow of direct investmentcapital slowed to €30.7 billion in the January-November2002 period from €102.3 billion a year ago, while inflows ofportfolio investment rose to €64.4 billion from €54.1billion in the first 11 months of 2001.
The current account, the widest measure of euro zone tradeand other transfers, recorded a surplus of €10.3 billion against a surplus of €3.7 billion in October.