2,5-Dimethoxy-2,5-dihydrofuran did not form the expected aldehydes when water-soluble rhodium-catalysts were used for the conversion with syngas. Instead of hydroformylation, hydrogenation was the main reaction path in water, where 2,5-dimethoxytetrahydrofuran and its hydrolysis product, succinic dialdehyde, were obtained. The formation of hydrogenation products indicates water in the coordination sphere of rhodium. This may provide us with information on the environment of an active metal in aggregated structures like micelles and vesicles which are gaining in importance in biphasic catalysis. (C) 2000 Elsevier Science B.V. All rights reserved.