Concerns push euro to four-month low

Concerns push euro to four-month low

TOKYO - Agence France-Presse
Concerns push euro to four-month low

An employee of a clothing store works in Tokyo. Along with the euro, Asian currencies also lost against the US dollar yesterday, market data shows. REUTERS photo

The euro tumbled in Asian trade yesterday to its lowest level against the US dollar in four months, amid rising concern over the eurozone fiscal woes as debt-hit Greece gets set for fresh elections.

The single currency hit $1.2688, its lowest against the greenback since January 16, while it also tumbled to 101.96 yen, down from 102.12 yen in New York on May 15 and its lowest since mid-February. Early in the morning, the euro had inched back above the 102 yen level.

In India the rupee hit a record low 54.31 to the dollar --breaching its previous low of 54.30 struck on December 15-- owing to eurozone woes as well as ongoing economic troubles at home.

On European debt markets, the spread between 10-year Spanish and German bonds hit a record high in early trading, underscoring fresh fears of contagion across the eurozone as Madrid’s borrowing costs soar.

The euro’s drop came as German Finance Minister Wolfgang Schaeuble said yesterday that it was not possible to re-negotiate an international aid plan for Greece, after anti-austerity parties won 70 of the vote in last week’s elections.

 “This is an aid program that was prepared down to the last detail, we cannot re-negotiate it,” Schaeuble told Deutschlandfunk radio a day after Greek political leaders said they were unable to form a new government, meaning new polls will likely take place next month.

New elections will prolong a tortuous crisis that could ultimately see Athens exit the eurozone and even the European Union.

“There is a pervading sense of unease in financial markets, a disquieting feeling of having been in something like this position before and wondering if it might turn out the same,” National Australia Bank said in a note Wednesday.

Credibility of euro

“In Greece, there are increasing outflows from its own banking sector and broader discussion of contagion effects,” it said.

“The concern now is regarding contagion. It’s not Greece per se that is the problem, but the credibility of the euro as a currency,” the bank said.

The weak economic data out of Europe has added to rising fears about the 17-nation eurozone.
The dollar was changing hands at 80.39 yen Wednesday, up from 80.23 yen late Wednesday in New York, while the rupee drop’s to a record low against the greenback was stoked by eurozone fears and flagging domestic indicators.

Masafumi Yamamoto, chief strategist at Barclays Bank in Tokyo, said the dollar may rise above 81 yen if minutes of the US Federal Reserve policy-making body due later Wednesday suggest the Fed will hold off additional easing steps.

“It’s worth paying attention to whether the number of the Fed board members supporting additional easing will decrease,” he told Dow Jones Newswires.

The greenback firmed against other Asian currencies earlier yesterday.