The euro dropped to a seven-week low versus the US dollar as Greece moved closer to defaulting on its obligations, bolstering concern the region’s sovereign-debt crisis is worsening.
“The European debt markets are particularly unsettled at this point and any unsettling headlines certainly have the potential to hurt the euro,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co in New York. “Policy makers do appear to be fairly resistant to any kind of change in the terms or conditions surrounding Greek debt. It’s negative for the euro.”
Europe’s shared currency fell 1 percent on Friday to US$1.4161 and touched US$1.4048 on Monday, the lowest since March 29. On the week, it gained 0.3 percent, from US$1.4119 on May 13. The euro slid to ￥113.42 on May 16, the lowest level since March 18. It rose 1.4 percent over the week to ￥115.69 in its first weekly advance this month. The US dollar strengthened 1.1 percent to ￥81.70, from ￥80.80 on May 13.
The yen was the worst performer against major currencies this week as Japan slid into its third recession in a decade and Japanese Prime Minister Naoto Kan said he expects the central bank to maintain a flexible monetary policy.
“The fact that Japan is officially in a recession again is the death knell for the yen,” said Paresh Upadhyaya, Americas G10 -currency-strategy head at Bank of America Corp in New York.
The US dollar fell versus most peers as minutes of the US Federal Reserve’s meeting on April 26 and April 27 showed that while officials began to coalesce on a strategy to reverse record monetary stimulus, no action is imminent.
The British pound weakened for the first time in three weeks against the euro as traders scaled back bets on when the Bank of England will raise interest rates.
The UK currency was little changed against the US dollar. The pound declined 0.5 percent against the euro and 0.5 percent against the US dollar on Wednesday as minutes from the Bank of England’s May 5 meeting showed the majority of policy makers warned against raising borrowing costs. The pound declined 0.3 percent against the euro in the week as of 4:33pm on Friday in London.
Asian currencies rose this week, led by South Korea’s won, on optimism funds will increase purchases of the region’s assets after economic data showed accelerating growth and the US signaled rates will remain low.
South Korea’s won appreciated 0.4 percent this week to 1,082.80 per US dollar in Seoul, according to data compiled by Bloomberg. Singapore’s dollar climbed 0.3 percent to S$1.2358 and Indonesia’s rupiah rose 0.1 percent to 8,543.
The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, advanced 0.3 percent in the past five days.
The New Taiwan dollar on Friday strengthened by the most in more than a week on optimism economic growth will continue to draw funds from global investors.
Taiwan’s economy expanded 6.55 percent in the first quarter from a year earlier, compared with 6.92 percent in the previous three months, the statistics bureau said after the currency market closed on Thursday.
The NT dollar rose 0.3 percent from Thursday to NT$28.780 against its US counterpart as of the 4pm time close, according to Taipei Forex Inc. It was the biggest one-day advance since May 11.
The currency, which was little changed this week, has strengthened 5.5 percent this year, the best performance among the 10 most-traded Asian currencies.