The dollar jumped against the euro on Friday on concerns over Greece’s budget deficit and weak US economic data that led to an investment flight to the safe-haven greenback.
The euro fell sharply to US$1.4385 at 10pm from US$1.4501 late on Thursday in New York, falling below the psychological 1.4400 level for the first time in a week.
The single European unit hit an intra-day low of US$1.4356, it lowest since Dec. 21.
The dollar however fell against the Japanese currency, another safe haven, to ¥90.82 from ¥91.23 a day earlier.
The market was dogged by persistent fears that other debt-stricken eurozone members could face the same fate as debt and deficit-ridden Greece.
German Chancellor Angela Merkel denied on Friday that she had sought to criticize Greece a day earlier with a forecast that the euro would face a “very difficult phase” because of Athens’ budget crisis.
In rare critical remarks made on Wednesday, Merkel had voiced concern that “the euro is in a very difficult phase for the coming years” because the Greek debt debacle had fueled speculation regarding eurozone cohesion.
Weak US economic data last week also showed that recovery in the world’s largest economy may not be as strong as early thought, triggering some flight from riskier assets such as stocks to the safety of the dollar.
“Risk aversion has finally hit the forex markets following another round of weaker US economic data,” said Kathy Lien, director of currency research at Global Forex Trading.
“The dollar rallied against higher yielding currencies as there are only so many disappointments the market can take before the optimism fades,” she said.
“We are getting more and more evidence that the US recovery is not as strong as previously thought, especially compared to other countries around the world,” she said.
In late New York trade, the dollar rose to 1.0260 Swiss francs from 1.0182.
The British pound fell to US$1.6260 from US$1.6332.
Asian currencies advanced last week, led by the Malaysian ringgit and the Thai baht, as improving regional economies attracted funds from abroad.
Investors put almost US$3 billion into equity and bond funds in developing nations in the week to Wednesday, following record inflows last year, Massachusetts-based fund tracker EPFR Global said.
The ringgit appreciated 1.1 percent to 3.3407 per dollar in Kuala Lumpur from a week ago, data compiled by Bloomberg showed.
The Thai baht gained 0.9 percent to 32.87 and the New Taiwan dollar climbed 0.2 percent to NT$31.828, approaching a 16-month high.
South Korea’s won completed a four-week rally, climbing 0.7 percent to 1,123.07 from 1,130.75 on Jan. 8.
It touched a 16-month high of 1,117.40 on Jan. 11.
The yuan rose for a second week on speculation that the central bank will allow currency appreciation to resume to stem inflation.
Twelve-month non-deliverable yuan contracts rose 0.2 percent in the week to 6.6135 per dollar, indicating brokerages are betting the currency will advance 3.2 percent from the spot rate of 6.8269 in the coming year.