The euro fell to $1.3863 as of 9:20 a.m. in Tokyo from $1.3920 in New York yesterday,after declining to $1.3848,the weakest since Oct. 29. The 16-nation currency slid to 112.52 yen from 113.01,after dropping to 112.37,the lowest since Nov. 2. Photographer:Hannelore Foerster/Bloomberg
Nov. 8 (Bloomberg) —Mark Grant,managing director at Southwest Securities Inc.,and John Brynjolfsson,chief investment officer at Armored Wolf LLC,talk about Ireland’s sovereign debt crisis. European Union Economic and Monetary Affairs Commissioner Olli Rehn said today he endorses the Irish government’s plan to cut spending and raise taxes by as much as 6 billion euros ($8.4 billion) in 2011. (Source:Bloomberg)
The euro declined to a one-week low against the dollar as speculation European nations will struggle to raise funds reduced demand for the region’s assets.
The common currency weakened versus 14 of its 16 major counterparts as Portugal prepared to sell as much as 1.25 billion euros ($1.74 billion) of debt tomorrow as concerns about so-called periphery European nations caused their bonds to tumble. The pound touched its lowest level in a week after a U.K. housing-market gauge dropped more than economists forecast to an 18-month low.
“You’ve got these rumblings over in Europe,” said Joseph Capurso,a currency strategist at Commonwealth Bank of Australia in Sydney. “It’s mainly Portugal,Ireland and Greece. There’s a downside risk for the euro.”
The euro dropped to $1.3882 as of 10:56 a.m. in Tokyo from $1.3920 in New York yesterday,after declining to $1.3847,the weakest since Oct. 29. The 16-nation currency slid to 112.57 yen from 113.01,after touching 112.37,the lowest since Nov. 2. The dollar traded at 81.10 yen from 81.18 yen.
The euro has lost 2.3 percent in the past three days amid concern debt-stricken nations will struggle to repay bondholders and spending cuts will stifle growth in the region.
The spread on the 10-year bonds of Portugal over German debt increased to as much as 444 basis points yesterday,the most since at least 1997,while the difference in yield for Irish bonds increased to a record 550 basis points.
The Irish government laid out a plan last week to cut spending and raise taxes by as much as 6 billion euros ($8.4 billion) in 2011. It will detail how it aims to reduce the 6 billion euros on Dec. 7.
‘Become Untenable’
“Over the past few weeks,it has become clear that both the political and financial situation in Ireland has become untenable,” analysts led by Mansoor Mohi-uddin,Singapore-based chief currency strategist at UBS AG,wrote in a research note yesterday. “We view euro-franc as the best vehicle to express the view that problems in the euro-zone periphery are once again heating up.”
Switzerland’s currency advanced to 1.3417 per euro from 1.3448 yesterday. It reached 1.3407,matching the highest since Oct. 21. The franc has risen 1.2 percent in the past week among 10 developed-nation currencies,Bloomberg Correlation-Weighted Currency Indexes show. The euro has dropped 1.5 percent,according to the gauges.
U.K. Housing Data
The Royal Institution of Chartered Surveyors said today the number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 49 percentage points,compared with minus 36 points in September.
“Sterling is at risk from the anticipated deterioration in the U.K. data over the coming week,” analysts led by Hans- Guenter Redeker,London-based global head of currency strategy at BNP Paribas SA,wrote in a note yesterday.
Economists had forecast a decline to minus 39 points,according to the median of 20 predictions in a Bloomberg News survey. While the Bank of England kept its benchmark interest rate at a record low of 0.5 percent last week,banks are still rationing credit,RICS said.
The pound fell to $1.6068,the lowest since Nov. 3,before trading little changed at $1.6143
