Ministers set to fix conversion rate for euro at around 79p

The value of one euro will be fixed at around 79p when the EU finance ministers meet tomorrow to set the exchange rates for the euro against the 11 currencies joining monetary union. The new rates will be announced at 11.30 a.m. tomorrow and will be confirmed one hour later by the finance ministers. The agreed fixed exchange rates will become effective and the euro will come into being at midnight tomorrow, as we enter 1999.

The ministers agreed some months ago the rates at which the euro member currencies would be fixed against each other. For example £1 will be worth 2.4833 German deutschmarks.

However, the ministers will meet tomorrow to agree the rates at which each of the member currencies will translate into the euro. This has had to be left until the last moment as part of the changeover process involves the current EU basket currency - the ecu - translating one for one into the euro. The ecu is based on an average value of all EU member currencies, including those like sterling which are not joining monetary union.

On the basis of the ecu rates trading on the markets yesterday, one euro will be worth about 79p. Dealers in Dublin said that trading was very quiet and no significant change in this rate was expected. "The euro is being born in a whimper," one commented, with turnover in European currencies very low.

Once the rates are set tomorrow, bankers across Europe will be working through the New Year weekend to reset computer systems to be able to deal in euros when trading starts next Monday, January 4th. The exercise will involve tens of thousands of bankers, with some sources estimating that around 2,000 staff in Dublin - mainly information technology specialists - will be working for at least part of the bank holiday weekend.

It is essential that computer programs can handle the new currency, as even small errors could lead to transactions being rejected and cause chaos across the banking system. Bankers in Dublin say they have already completed dry runs which indicate that the changeover should be completed successfully.

Staff in all the 11 central banks will also be on hand to oversee the changeover and deal with any problems which emerge. The government debt of all the member states joining the new currency has to be translated from national currencies into euros over the weekend to be ready for the start of trading on Monday.