Euro means doubts for Asia

Euro means doubts for Asia

MANILA (AFP): The looming introduction next year of Europe's single currency will be a source of uncertainty for recession-hit Asia, the Asian Development Bank said in a report Friday.

The ADB said central banks will have to switch some of their reserves away from dollars because of the huge amount of trade conducted with Europe, where 11 nations will bring in the euro on Jan. 1.

"One source of uncertainty not apparently connected with the Asian crisis will be the introduction of the single European currency in 1999," the Manila-based bank said.

"The currency shift matters because Asian economic ties to Europe are significant even though only about 12 percent of Asian countries' foreign exchange reserves are now denominated in European currencies," it added.

Asian nations also "owe roughly half the external debt" to major European banks.

With Europe accounting for one-third of Asia's trade, Asian economies must "settle trade transactions" using the new currency, the report said.