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Sun, Mar 21, 2010 - Page 10 News List

Euro falls as leaders spar over assistance to Greece


The euro posted its biggest five-day drop against the US dollar since January as EU leaders sparred over financial assistance to Greece before a summit meeting next week, damping appetite for the currency.

The US dollar and the yen rose against most major counterparts as India unexpectedly raised interest rates and commodities fell, discouraging demand for assets linked to growth. The euro declined against most major currencies after German Chancellor Angela Merkel said on Wednesday the IMF may be the only answer to Greece’s problems.

The euro slid 1.7 percent, the most since a 2 percent drop for the five days ended Jan. 29, to US$1.3530 on Friday, from US$1.3769 on March 12. The euro fell 1.8 percent to ¥122.51, from ¥124.69 a week earlier. The US dollar was little changed at ¥90.54, compared with ¥90.56.

Sterling dropped versus all of its major counterparts on Friday after Bank of England policy maker Andrew Sentance said Britain may return to recession.

There’s “some risk of a double-dip recession,” Sentance told CNBC, and the country will need “substantial” fiscal tightening. The pound slid 1.5 percent to US$1.5013 and 0.9 percent to £0.9012 per euro.

South Korea’s won and the Malaysian ringgit fell this week as concern about Greece’s ability to secure financial assistance from the EU cooled demand for ­emerging-markets assets. Thailand’s baht advanced as overseas investors pumped more funds into the nation’s shares.

The Bloomberg-JPMorgan Asia Dollar Index retreated from a 19-month high as China rebuffed international calls for a stronger yuan, provoking a spat with US lawmakers.

The won fell 0.4 percent from the end of last week to 1,132.8 per US dollar in Seoul, according to data compiled by Bloomberg. The ringgit slid 0.3 percent to 3.3010 from March 12, when it reached 3.2910, the strongest level since August 2008. The Singapore dollar was 0.1 percent lower at S$1.3956.

The New Taiwan dollar had a fifth weekly gain, the longest winning streak since October, on optimism improving ties with China will spur trade and economic growth, luring overseas investors. Goldman Sachs Group Inc on Friday raised its 12-month forecast for the NT dollar to NT$30 from a previous estimate of NT$30.50.

The currency reached NT$31.667 on Thursday, the highest level since September 2008, as global funds bought US$420 million more local shares than they sold. Net purchases this week totaled some US$1.1 billion.

Elsewhere, the Thai baht climbed 0.7 percent in the week to 32.31 per US dollar and the Indonesian rupiah rose 0.6 percent to 9,105. The Philippine peso gained 0.3 percent to 45.52, and China’s yuan was little changed at 6.8265.

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