The exchange rate for the pound against the other 10 currencies entering monetary union - and against the new currency, the euro - will be set irrevocably today by EU finance ministers. With trading quiet on European foreign exchange markets yesterday, it is now certain that the pound-to-euro exchange rate will be set as one euro equals around 79p to 80p. The new currency will be worth roughly two deutschmarks.
As well as announcing the translation rates for each member currency into euros, the meeting will also confirm the previously announced bilateral conversion rates between the 11 currencies. The pound will be set at 2.483 German marks and at fixed rates against all the other euro currencies. Traders in Dublin yesterday said that there will little dealing ahead of the move to the single currency, with no surprises expected from the Brussels meeting.
There is little room for argument at today's meeting as the ministers will be setting the euro rate at a rate equivalent to the ecu - the basket of all 15 European currencies. On this basis one euro will be equal to somewhere over 79p - one economist last night estimated that the rate would be around 79.50p. The ministers will officially launch the euro today at a one-hour meeting in Brussels when they set the final conversion rates with each of the national currencies in the new euro zone.
All 15 members of the European Union will be represented, although only 11 are taking part in the launch, to sign the official document on conversion rates to the new single currency.
The session will be opened at 11.30 a.m. by Austrian Finance Minister Mr Rudolf Edlinger because Austria holds the EU presidency.
The European Commission's proposals for conversion rates with the 10 currencies - Belgian and Luxembourg share the same franc - should reflect the final rates for member states against the ecu, which the euro is replacing on a one-for-one basis.
The rates will be flashed up on a huge, lit signboard. They will have been calculated on the bases of market rates that day against the dollar, after notification from each central bank.
The figures will also be published in real time as the meeting is followed live on the euro's Internet site: http:/europa.eu.int/euro/. They will be available on the Irish Times eurotimes site (www.irishtimes.com/eurotimes).
The new European Central Bank, which will set monetary policy and interest rates in the euro zone, will give its opinion after which some EU finance ministers are expected to make statements.
The final settlement must be unanimously adopted before being signed by Mr Edlinger, surrounded by the other ministers. The euro conversion rates will become official around 12.30 p.m.
The first markets to react to the euro rates will be in Asia when markets reopen on Monday, January 4th after the new year weekend. Analysts do not expect any major move in the currency's value in the first day of trading - some expect a small rise on the first day of trading. For Ireland, much attention will be focused on the performance of sterling, which some analysts believe will be volatile in the wake of the creation of the new currency.
