Companies in the euro-zone are gearing themselves to do their business transition in euro. After January 1, 1999, the national currencies of the 11 European countries will be used just as a mode of transition in lieu of actual euro notes and coins. From 2001, with the actual euro in circulation, these currencies will cease to be legal tender. This means that over 290 million people of the huge European market will be dealiong in euro.

The companies which had been trading through different European currencies will switch over to the new currency. They would also want their international business to be carried out in the same currency, said Jo Vandercappellen, European Commission, member of the think-tank working on the impact of the single currency.

It is easy and, in fact, advantageous to do business in one's own currency, he added.However, so far, it was not very practical for European companies to conduct business in different currencies of the continent as they were not widely known internationally.

Vandercappellen said that the businessman outside Europe found it difficult to use these currencies as working out product pricing and the exchange risk in several currencies prevalent in the region was cumbersome. It was particularly inconvenient if business volume was low. Hence, he added, the US dollar was the best option available to both parties as it was not only a strong and stable currency but had been in use for international trade for a long time. However, the large euro zone, which will account for around 20 per cent of the world GDP and a similar proportion of world trade, will automatically make the new currency another international one.

Most big corporates in Europe have already started to prepare their accounts in euro which also includes their product pricing. They have also begun talks with trade partners outsideEurope for switching over to euro. However, there are some exceptions here. "It is still confusing to some and we would like to think in terms of euro only when we actually see it or at least start converting our currency's value with the new one," said a representative from the Dusseldorf trade fair in Germany. Airbus Industrie, the European aircraft manufacturer, believes that it will have to price its product in dollars to suit customers. "There is only another competitor, Boeing, and if one sets the price in dollars, we have to quote the same currency for easy comparison," said David Velupillai, regional manager press relation in Toulouse, France.

At least initially consumers may prefer to use the dollar, he added. However, Airbus may still give prices in both currencies and leave the choice to the client, he said. Because of the high cost of the product, the company will have to see the clients' preference for the use of the currency, he added. On the other hand, the single currency can be beneficialfor small and medium-sized companies which had been using various European currencies. This is because with the euro in place, currency risk analysis will become easy and companies will also save on forex transition costs, said Peter Bekx, head of the DG II-D, the unit dealing with the economic and financial affairs. It is still unclear how many companies outside Europe will immediately switch over to euro. Initially the changeover may be gradual, he added.