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Sun, Feb 28, 2010 - Page 10 News List

Euro declines for third month amid debt crisis

BLOOMBERG

The euro fell for a third straight month against the US dollar, its longest losing streak since November 2008, as Greece’s debt woes weighed on the region’s economic outlook.

The 16-nation currency posted its first weekly gain against the greenback, snapping six weeks of decline, after a report on Friday that Germany may consider buying Greek bonds through a state-owned lender. The European Central Bank is expected to keep its refinancing rate at 1 percent after its monetary policy meeting next week, according to all 51 economists in a Bloomberg News survey.

The euro this month lost 1.7 percent against the US dollar and 3.2 percent against the yen.

The euro rose 0.13 percent this week against the greenback, its first weekly gain since Jan. 8. It reached US$1.3444 on Feb. 19, its weakest level since May 18. For the week it declined 2.7 percent versus the yen and touched ¥119.66 on Feb. 25, the first time the currency has fallen below the ¥120 level since Feb. 24 last year.

The greenback fell for the first week in three versus the yen as an increase in jobless claims and plunge in consumer confidence tempered speculation the US economy will recover more swiftly than other nations.

The pound had its biggest weekly slide against the euro in five months and gilts rose as Bank of England policy makers signaled further measures may be needed to boost the UK’s ailing economy.

The pound depreciated 1.8 percent against the euro to £0.8955, the biggest drop since Sept. 25. Sterling fell 1.9 percent against the US dollar to US$1.5176 after reaching US$1.5164, the lowest level since May 18. The yield on the benchmark 10-year gilt fell 14 basis points to 4.04 percent and the two-year note yield declined 20 basis points to 0.94 percent.

Asian currencies strengthened this week, led by Singapore’s dollar and Malaysia’s ringgit, after government reports showed economic recoveries in the region are gathering pace.

Singapore’s dollar appreciated 0.7 percent to S$1.4058 against the US currency, while the ringgit rose 0.3 percent to 3.4000, according to data compiled by Bloomberg.

South Korea’s won appreciated 0.1 percent this week to 1,159.85 per US dollar in Seoul. It gained 0.3 percent on Friday, as the outlook for factory production brightened.

The New Taiwan dollar strengthened on Friday, snapping a two-day loss, on speculation exporters converted overseas earnings to settle month-end bills.

The NT dollar climbed 0.1 percent to NT$32.085 against its US counterpart at the 4pm close on Friday, according to Taipei Forex Inc. It weakened 0.4 percent this month, the worst performer among Asia’s 10 most-traded currencies excluding the yen.

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