Fewer public statements judged beneficial for euro

As the euro faced fresh pressure on the currency markets, research published in London suggests that "silence is golden" when it comes to public pronouncements on the currency by officials at the European Central Bank.

Research released yesterday by 4Cast, an economic consultancy, finds an inverse relationship between the number of official statements on the euro and the performance of the currency - in other words the higher the number of statements the weaker the currency became.

The three quietest periods for official comments so far this year have coincided with relative stability or appreciation for the euro against the dollar.

Mr Ray Attril, author of the report and director of analysis at 4Cast, said statements by ECB officials seemed to have exacerbated the plight of the euro as it slid towards parity with the dollar.

"There has been a feeling in the market that the ECB has talked too much and that the range of opinions expressed has been greater than in the US Federal Reserve or in the Bundesbank," he said.

In June Mr Hans Eichel, German finance minister, proposed restricting the number of officials allowed to comment for just that reason.

On the markets yesterday the euro slipped to new lows against the rising Japanese yen and was also weaker against the US dollar. The dollar extended its rally against the euro as markets continued to draw reassurance from benign US inflation figures at the end of the week. However, dealers will be closely watching today's US consumer price figures for any signs of inflationary pressures which could undermine US equities and dollar by pointing towards higher US interest rates.

Despite these concerns, the dollar yesterday resumed last week's rise against the euro, reaching a peak of $1.054 before closing the London session at $1.057.

The dollar was also boosted by a strong start from US equities, with the Dow Jones passing the 11,000 mark for the first time since July 28th. The dollar fared less well, however, against the yen which was bolstered by an upward revision to June's industrial production figures. Having soared close to Y116 at the end of the week on the back of a mild producer prices release, the dollar slumped back to Y114.7.

Yen strength was even more pronounced against the euro, which drifted close to Y121 before ending the session at Y121.3.