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EDITIONS
 Monday, 27 January, 2003, 17:50 GMT
War talk sends euro near four-year high
Dollars and euros
War talk has sent the dollar tumbling
The euro on Monday reached a near four-year high against the US dollar on continuing fears over a war on Iraq and the global economic outlook.

The euro reached $1.0907 at one point, a level not seen since March 1999, before edging back to $1.0836 at 1700 GMT.

"It's a matter of a concern for us if the fall in the value of the dollar is too rapid," Germany's central bank president and European Central Bank board member Ernst Welteke said.

Continuing weakness of the dollar could make exports from the eurozone, where the leading economies of Germany and France are struggling, uncompetitive on the global markets.

The sell-off of the dollar also sent the UK pound to a new three-year high against the greenback, while the safe-haven Swiss franc maintained a four-year high.

Anti-dollar feeling

Sterling rose as high as $1.6377 in early European trade, its highest since January 2000.

"Last week's close above $1.0700 has forced us to adjust our view," said Nicole Elliott of Mizuho Corporate Bank.

"It suggests we have underestimated bullish momentum and the gathering anti-dollar feeling."

The fresh dollar weakness came as world stock markets tumbled and UN arms inspectors delivered an update on their work in Iraq to the Security Council.

Some market experts discounted the arms inspectors' report as a driver of the forex market.

Said Robert Sinche, currency strategist at Citibank: "Has Iraq proven that it has disarmed? No. Is there proof that it is holding weapons of mass destruction? No.

"So the forex market is saying there is no clear conclusion to support one view or the other, and it will continue to take direction from other markets."

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  ON THIS STORY
  The BBC's Megan Rowling
"A strong Euro may not be all bad news for Germany"

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27 Jan 03 | Americas
22 Jan 03 | Business
17 Jan 03 | Business
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