Euro Tumbles To Near 12-year Low Against Yen On Europe Jitters
03:17, 23rd July 2012
(RTTNews) - Extending its Friday's decline, the euro slumped to a near 12-year low against the yen and a fresh 2-year low against the dollar in Asian trading on Monday amid renewed concerns over the eurozone debt crisis.
Fears that Spain may be forced to seek a broader bailout from its eurozone neighbors and concerns that Greece may not be able to meet its bailout targets sparked aggressive selling of the single currency.
Spain's government bond yields topped 7.3 percent at one point on Friday, hitting a record high since the introduction of the euro in 1999, after the Spanish region of Valencia has asked for financial assistance from that country's central government.
The surge in Spanish borrowing costs came despite Eurozone finance ministers approving a 100 billion euro bailout deal for the recapitalization of troubled Spanish banks.
Meanwhile, Greece woes resurfaced after reports suggested that the country's Prime Minister Antonis Samaras told former U.S. President Bill Clinton on Sunday that Greece is in a "Great Depression" similar to the American one in the 1930s.
Greece's troika of international creditors - the European Commission, the European Central Bank and the International Monetary Fund - will meet in Athens tomorrow to determine whether Athens has implemented all agreed reforms and budget cuts as per the bailout terms of its international agreement.
The euro that ended last week's trading at 95.49 against the yen fell to 94.65 in Asian deals. This set the lowest point for the euro since November 2000.
The yen typically strengthens in times of financial turmoil as Japan's trade surplus makes the currency attractive due to the implication that the nation does not have to rely on overseas lenders.
But the yen's recent rise to a near 12-year high against the euro adds pressure on the Japanese authorities to take some measures to halt its rally as a stronger yen makes Japanese exports less competitive and erodes overseas earnings when the revenues are repatriated.
Japanese Finance Minister Jun Azumi reportedly said today that he is watching the currency moves closely and will take decisive steps to counter excessive yen gains.
Elsewhere, the Japanese government said in a monthly report today that it vowed to work "decisively" with the Bank of Japan to prevent the adverse impacts of yen appreciation and deflation on the economy.
Prime Minister Yoshihiko Noda held talks with Bank of Japan Governor Masaaki Shirakawa in Tokyo earlier on Monday as the yen gained further ground against euro amid worries over Spanish banking sector despite Eurogroup's approval of the bailout deal last week.
The euro-yen pair has lost 15 percent since it reached a 5-month high of 111.45 on March 21, 2012.
Against the U.S. dollar, the euro broke its 1.210 level for the first time since June 2010 and hit a low of 1.2095. If the euro-dollar pair weakens further, it will break the 1.200 level. The pair ended last week's trading at 1.2165.
The euro-dollar pair has depreciated 6.5 percent thus far this year.
Elsewhere, the euro recovered against the pound after hitting a fresh multi-year low of 0.7761 in early Asian deals. At present, the euro-pound pair is worth 0.7778.
Against the Swiss franc, the euro continued to hold in a range of 1.2010/1. 2014.
Looking ahead, Swiss M3 money supply data for June is expected at 3 am ET and the Eurozone consumer confidence index for July is slated for release at 10 am ET.
There are no major economic reports due from the U.S. today.
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