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 user 2005-06-03 at 10:45:00 am Views: 44
  • #9489
    Euro sinks after Dutch ‘No’ vote
    The euro has hit eight-month lows after Dutch voters gave a
    resounding “No” to the European Union constitution

    The euro fell to $1.2158 overnight, its lowest since September, but rebounded
    slightly to $1.2261 by midday.

    The second “No” vote in a week has prompted fears that economic reform and
    integration across Europe will slow.

    But despite such concerns, the European Central Bank (ECB) voted to leave
    rates unchanged – meaning they have now been stationary at 2% for two full

    The zone’s “one size fits all” rate has been widely criticised as too high
    for some struggling economies but not high enough to rein in inflation and
    potential asset bubbles elsewhere.

    But commentators have said that while the “No” votes from France and the
    Netherlands have not helped, the main reason for the currency’s current lows was
    the recent string of interest rate rises in the US.

    ‘Business as usual’

    Meanwhile, Dutch central bank chief Nout Wellink dismissed claims that
    European Monetary Union could break apart as a result of the vote.

    “It’s utter nonsense. For us, it’s business as usual,” he said as he headed
    to the ECB rates meeting.

    I think the big question is the big foreign
    investors… if their perception of the Netherlands changes and therefore money
    fails to come in

    Ron Van der Kroll, Dutch business

    The euro is still well above its launch value against the US dollar, and its
    recent decline is expected to boost exporters in the eurozone.

    Analysts said that hostility to the euro, the sluggish European economy,
    fears of a European super-state and concerns about immigration had prompted 62%
    of Dutch voters to reject the constitution.

    Ron Van der Kroll, head of Dutch business leaders’ group Het Finanzielle
    Dadblad, said the poll would have no “immediate effect” on the country.

    But he told the BBC: “I think the big question is the big foreign investors,
    American or Asian companies.

    “If their perception of the country changes and therefore money fails to come
    in, the Dutch economy will certainly feel it.”

    Euro ‘anger’

    Mr Van der Kroll added that the vote was an “emotional” reaction from the
    Dutch people who were angry at big price rises since the euro’s introduction.

    Experts said the vote also casts doubt on the EU’s plans to expand further
    into Eastern Europe.

    European Commission President Jose Manuel Barroso acknowledged that the Dutch
    vote meant difficult days ahead for the EU.

    “I think we have a problem, a serious problem,” he said.

    Observers said the constitution was dead in the water.

    “To have such an overwhelming ‘No’ is really crushing for the constitutional
    treaty,” said Richard Whitman of the Royal Institution of International Affairs
    in London