The commission proposed that the euro should be fixed at 1.95583 German marks, 6.55957 French francs, 1,936.27 Italian lire, 166.386 Spanish pesetas, 200.482 Portuguese escudos, 5.94573 Finnish markka, 0.787564 Irish punts, 40.3399 Belgian/Luxembourg francs, 2.20371 Dutch guilders and 13.7603 Austrian Schillings. The rates have been ratified by European finance ministers and officials of the 11 legacy countries, which means that from Friday (today) these currencies are history.

The commission also announced the Euribor and Eurilibor rates for three months at 3.248 per cent and 3.241 per cent. Euribor and Eurilibor (UK) are the rates at which banks lend money to one another in Europe and the UK respectively and these rates set the trend for other kinds of borrowing by governments and corporates.

India will be among the first countries to trade in the euro.Foreign exchange dealers are certain that the rupee will open at 49.75 against the euro on January 1 and trade between 48 to 50 unless there is a sudden bout of volatility.

The rest of the world will begin trading in the euro only on January 4, when the markets open after the Christmas-New Year break.

"I expect the euro to open at 49.70 to 50 tomorrow. Initially the currency will strengthen-at least for the first six months-after which there are chances that it might weaken", says PH Ravikumar, senior executive vice-president at ICICI Bank. However, Vasan Sridharan, economist at the Standard Chartered treasury, says that the quotes will depend on how dealers handle the new currency. "There might be some volatility", he adds. The volatility in yen-deutsche mark trades has made it difficult to predict a narrower range for the currency in India. Even when trading starts in the international markets on January 4, the euro is expected to be volatile.

"We don't expect the euro to stabilise on January 4. Someof the major marketmakers will not be quoting euro on the first day. They may enter to give quotes only on the subsequent days," said Rajiv Baruah, head of foreign exchange, Deutsche Bank. Deutsche Bank was quoting the euro at 1.16673 dollars on Thursday late evening in Mumbai. C Girish of Mecklai Financial and Commercial Services expects one euro to be equal to Rs 49.70/75. ``Here we are making an assumption that one European currency unit (ECU) will remain stable at 1.17 against the dollar and the rupee will range between 42.50/55 against the dollar. If this is so, the Indian rupee will range between 49.75/50.00 against the the Euro," he said.

The euro, with its base in a low inflation area, is expected to vie with the mighty dollar as a global reserve currency, benefiting the world's new dominant trading power, the European Union. The EU's Eurostat statistical agency has said that average consumer price inflation in the Euro zone fell to 0.9 per cent in November from 1.6 per cent a year earlier.

TheEuropean Central Bank, based in Frankfurt, will govern Euro zone interest rates. "I do not expect the ECB to pursue a monetary policy which will be a reversal to the policies that the 11 countries followed earlier", Ravikumar said.

Banks are expected to convert all overnight orders in DM into euro on Friday morning, but euro trading in the Indian forex market is expected to remain thin on the first day because the international markets will be closed till January 4.

"There will be quotes but I do not expect large scale trading to take place on January 1", says P Mukherjee, chief of treasury at UTI Bank. Brokers have also said that they will quote only if the banks start doing so too.

All customer forex transactions denominated in either the euro or the 11 legacy currencies will be handled by banks on a provisional basis on January 1, subject to subsequent adjustments when firm rates are obtained on January 4.

The euro will now become the official currency of 11 EU partners -- Britain, Sweden, Denmarkand Greece are not taking part for now -- sounding the death knell for the mark, franc, lira and the rest. Although new euro notes and coins will not appear for three years, the euro will be used in electronic financial and business transactions, with consumers able to pay mortgages and credit-card bills in euros. The approval of the locking rates by European ministers will trigger a frantic weekend for thousands of staff at banks and financial institutions across Europe as they race to prepare computer and trading systems for the euro's trading debut on Monday.