The weakness of the new single currency, the euro, against the US dollar slowed investment in euro-denominated assets during the first few months of this year, according to Asset Management Trust. However, "many commentators believe the euro/US dollar is looking for a floor" [stabilising]. This means that any slight improvement in growth prospects, easing of tensions in the Balkans or positive comments on the euro from the European Central Bank will signal a period of euro strength. Asset Management Trust researchers believe that investment may return to the levels seen in 1998 in euro-denominated funds.
If this prediction comes true, it may be good news for private investors in European mutual funds who may see their fund values increase as demand for the underlying European shares increases.
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