Happy 10th Birthday

June 2, 2008

Although the euro did not come into being until the last day of 1998, the European Central Bank – a conception if you will – dates back to June 2, 1998. For those keeping score, the first meeting of the ECB Governing Council happened one week later on June 9th. Ten years ago, the dollar was trading at DM 1.7803, FF 5.9705, and LIT 1754.7. Over the ensuing ten years on balance, the euro (synthetic at first and now real) has appreciated marginally over 41% against the greenback or 3.6% at an annualized rate. During those ten years, three-month eurodollar deposit rates had an average premium above average 3-month euribor rates of 3.29 percentage points, but the the spread today is negative 2.18 percentage points.

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