The euro fell for a fifth week versus the US dollar in its longest losing streak in almost two years on concern Europe’s debt crisis is worsening and as data showed the US labor market is strengthening.
The 17-nation currency slid to a record low against the Australian dollar and traded at the weakest level in more than 11 years versus the yen as demand at bond auctions spurred concern European nations will struggle to sell debt. The pound rose to a 15-month high versus the euro. Hungary’s forint tumbled and Fitch Ratings downgraded the country to “junk.”
“One of the factors driving the market right now is a general lack of demand for European assets,” said Shahab Jalinoos, a senior currency strategist in Stamford, Connecticut, at UBS AG. “There are enough sources of new bad news to keep the market adapting; all the bad news is not priced in yet.”
The euro fell 1.9 percent to US$1.2717 on Friday in New York in its biggest five-day loss since Dec. 16 last year. It hasn’t fallen for five straight weeks since February 2010. It touched US$1.2698, its weakest level since Sept. 13, 2010. The shared currency depreciated 1.8 percent to ￥97.90 and reached ￥97.88, the lowest since December 2000. The US dollar was little changed at ￥76.97.
It was the worst week for Europe’s common currency in four months. The euro lost 1.3 percent against nine developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes, the most since it dropped 1.9 percent in the five days ended Sept. 2 last year.
Sterling reached its strongest versus the euro on Friday since Sept. 10, 2010, touching ￡0.8239. It gained 1.1 percent on the week. The pound slipped 0.8 percent to US$1.5426.
The euro dropped as France sold 4.02 billion euros (US$5.11 billion) of benchmark 10-year notes on Thursday at an average yield of 3.29 percent, compared with 3.18 percent at a sale on Dec. 1. The bid-to-cover ratio, the number of bids received for each unit of debt sold, fell to 1.64, from 3.05. Demand at a German auction of 10-year bonds a day earlier was lower than the five-year average.
ASIAN CURRENCIES
South Korea’s won and the Philippine peso led declines in Asian currencies this week on speculation investors would favor safer assets than those in emerging markets as Europe struggles to contain its debt crisis.
“Asian currencies have been under downward pressure on Europe’s lingering debt crisis,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp in Bangkok. “We have seen solid US data, which lends some support.”
South Korea’s won weakened 0.9 percent to 1,162.75. The Philippine peso dropped 0.7 percent to 44.138 and Thailand’s baht slid 0.4 percent to 31.69. The rupiah fell 0.3 percent this week to 9,095 per dollar in Jakarta.
The rupiah dropped for a third week on speculation the central bank would cut interest rates after official data showed the inflation rate fell to a 21-month low of 3.79 percent last month. Bank Indonesia, which cut its benchmark reference rate by a total 75 basis points last quarter to 6 percent, is scheduled to review it next on Thursday next week.
The Philippine peso dropped for a second week as government figures showed inflation eased to an 11-month low last month, boosting scope for an interest-rate cut.
The New Taiwan dollar climbed 0.2 percent to NT$30.245, as demand for the local currency continued to grow ahead of the Lunar New Year holiday, dealers in Taipei said.
Although the euro and other currencies in the region weakened against the greenback, the NT dollar was supported by demand from exporters who dumped the US dollar and bought into the local currency to fulfill their annual financial obligations, such as providing year-end bonuses to their employees, the dealers said.
The yuan completed its first weekly drop since the five days through Dec. 9 on signs policymakers are limiting gains to protect export growth. The People’s Bank of China set the fixing 0.08 percent weaker at 6.3166 per US dollar on Friday after Chinese Minister of Commerce Chen Deming (陳德銘) said the government would unveil measures to boost consumption this year. The yuan fell 0.3 percent this week to 6.3095 per US dollar.
“They are buying time to slow yuan appreciation, but not to engineer depreciation,” said Nizam Idris, a currency strategist at Macquarie Group Ltd in Singapore. “We could see a slower pace of appreciation in the months ahead until a soft landing in the Chinese economy is achieved.”
India’s rupee completed its first weekly gain in a month on speculation foreign funds would step up purchases of local assets. The nation’s government said on Sunday last week it would allow overseas individual investors to directly buy local equities. Foreign funds boosted local stock holdings by US$102 million this week through Wednesday, exchange data show. The rupee gained 0.7 percent this week to 52.7225.
Elsewhere, Singapore’s currency advanced 0.3 percent to S$1.2936 and the ringgit strengthened 0.9 percent to 3.1438.
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