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.