The continuing weakness of the American dollar which has thrown European currencies into turmoil was reflected in dealings in stock exchanges all over Europe when they re-opened on Monday morning (10 May).
The continuing weakness of the American dollar which has thrown European currencies into turmoil was reflected in dealings in stock exchanges all over Europe when they re-opened on Monday morning (10 May). The eyes of speculators and central banks were fixed on the indicator boards inside the stock exchanges, following the controversial weekend proposal by the EEC Commission that member-states float their currencies. West Germany and Holland responded by floating the Mark and the Guilder; whereupon Austria and Switzerland immediately revalued their currencies.
VISNEWS filmed the stock exchanges at work in Frankfurt, Amsterdam, Paris and foreign exchanges in London, and intercut them with film of West German Finance Minister Karl Schiller's press conference immediately after the West German cabinet decided to float the Mark on Sunday, showing the immediate cause of the current hectic financial activity in Europe, and its effects.
SYNOPSIS: The current financial crisis in Europe was sparked off by the decision of the West German cabinet to float the Mark, in the face of a massive inflow of American dollars. Finance Minister Karl Schiller informed a press conference of this decision straight after it was taken on Sunday.
On Monday morning, when the stock exchanges of Europe opened for currency dealing, all eyes were on the position of the dollar. In Frankfurt, the floating of the Mark had the effect of a 7 per ce??? revaluation against the dollar. Trading was brisk....and bargaining dealers soon found that dollars were bringing around four per cent less than when trading closed the previous week.
German newspapers approved the decision of the Common Market Commission to recommend that member states allow their currencies to float. But France and Italy opposed this strongly. The only member country to join West German was Holland.
The stock exchange in Amsterdam. In site of an agreement with the Benelux countries to act together, Holland also allowed the guilder to float. Activity was hectic on the stock exchange floor, and by the end of the day the guilder was about 2 1/2 per cent above official parity.
In Paris, where opinion was strongly against any floating or revaluing, all was far from well. The Bourse was crowded with nervous dealers making no decisive moves. Dealers reported that buying and selling was very limited...and the dollar strengthened against the Franc.
On the London market, the general reaction to the changes on the continent was one of cheerfulness The pound is described by British bankers as being very much on the sidelines. Early dealings on Monday left sterling marginally weaker but the banks said it was nothing to worry about. General opinion in the City, the heart of London's bank-land, was that the pound would not be affected by the currency crisis, although trading in marks and Swiss francs hotted-considerably.