European Government Rescue Plan Boosts their Currencies
The Euro surged against the U.S. Dollar following the unified plan proposed by major European countries in order to rescue their banks from collapse. The currency was at an 18 month low against the U. S. Dollar.
The Pound Sterling also gained against the U. S. Dollar after the U.K. government announced that it would inject $64 billion into 3 of its biggest banks in an effort to return confidence in what, most economists claim, is the worst world-wide financial crisis ever since the 1930s.
Consequently, European shares jumped and Wall Street is likely to rally as signs of better credit conditions will prompt investors to take on additional risk.
Authorities in Germany approved a rescue package of 400 billion Euros today, and the French government plans to establish a $55 billion fund allowing it to acquire stakes in its banks.
On October 13, 2008 in early trading in N.Y., the Euro was 1.8% higher at $1.3648, compared to $1.3257 on Friday, the lowest since March 2007. The Euro also gained 1.4% (136.79) against the Japanese Yen, while the U.S. Dollar fell by 0.4% (100.25 Yen) against the Japanese Yen. The Pound Sterling rose by 1.9% to $1.7360, after falling to a 5-year low of $1.68 late Friday.
Sterling rose 1.9% to $1.7360 after slumping to a 5-year low at $1.68 this past Friday.