Currencies
The euro fell to its lowest level in three weeks after October German business confidence declined for a fifth consecutive month, suggested slower EMU growth.

OECD predicted that EMU growth would slow in 2001, in part because of higher oil prices. The continuing growth gap between the EMU and the United States doesn't bode well for the euro. Continuing inflationary pressures have put the European Central Bank in a difficult position - especially since inflation control is their primary monetary policy goal. The ECB must walk the fine line between managing higher than desired inflation and scuttling growth in the EMU.

The ECB's credibility came under further strain Friday in the wake of remarks by its president, Wim Duisenberg. Asked Thursday whether the euro should be regarded as a success or failure nearly two years after its launch, Mr. Duisenberg said: "It is far too early to answer that question in a definitive way."

The initial trigger for the yen's decline in the past two weeks was political turmoil resulting from an unsuccessful attempt to oust Japanese Prime Minister Yoshiro Mori, analysts said. While Mori survived a no confidence vote on Monday, some analysts say the government may be unable to work out economic reform measures given Mori's frail leadership. The trouble has disappointed markets and has further deteriorated confidence in Japanese politics and the economy.

The yen's plight was exacerbated Friday after Mitsui Construction Co. said it would ask creditors to forgive some of its debt, fanning concern about Japan's economic recovery. Mitsui's troubles fueled speculation that there will be more to follow, which will put a lot of pressure on the banks and delay potential economic recovery in Japan. It would be the eighth Japanese construction company to obtain debt forgiveness from banks in the past three years. Concern about bad bank loans weakens prospects for the yen by giving foreigners reason to take their money out of the country in search of better investments elsewhere.

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