The euro fell to its lowest level since the collapse of Lehman Brothers Holdings Inc on concern that the 16-nation currency may be headed for disintegration.
The shared currency fell for a fourth week versus the US dollar and a third week versus the yen, the longest losing streaks since February, as German Chancellor Angela Merkel said that Europe is in a “very, very serious situation” despite a rescue package for the region’s most indebted nations. European Central Bank (ECB) Governing Council member Axel Weber speaks on financial-market regulation next week in Berlin.
“We went through a massive liquidation trade in Europe and risk-taking positions were wiped out across the board,” said Sebastien Galy, a currency strategist at BN Paribas SA in New York. “The markets are trying to figure out what the consequences are for growth. There are massive uncertainties and that will keep the downward pressure on the euro.”
The euro fell 3.1 percent to US$1.2358 this week, from US$1.2755 on May 7. It traded as low as US$1.2354 on Friday, the weakest since October 2008. The common currency dropped 2.1 percent to ¥114.38, from ¥116.81 last week. The US dollar traded at ¥92.47 after gaining 1 percent last week, the first weekly gain since the five days ended April 23.
European policymakers last week unveiled a loan package worth almost US$1 trillion and a program of bond purchases in an effort to contain a sovereign-debt crisis that has threatened to shatter confidence in the euro. ECB President Jean-Claude Trichet said the move wasn’t supported by all 22 of the bank’s Governing Council members.
The ECB said it would intervene in government and private bond markets “to ensure depth and liquidity in those market segments which are dysfunctional,” and central banks in Germany, Italy and France began buying government bonds on Friday. The ECB restarted a dollar-swap line with the Federal Reserve.
The German chancellor’s comments followed a report from El Pais that French President Nicolas Sarkozy threatened to pull out of the euro unless Merkel agreed to back the EU’s bailout plan at a meeting last weekend in Brussels, citing comments Spain’s Prime Minister Jose Luis Rodriguez Zapatero made at a meeting of socialist politicians. The Madrid-based newspaper didn’t say how it obtained the information. Aides to Sarkozy, Merkel and Zapatero all denied the report.
“The euro is doomed,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “It’s like a clown without its makeup. The strains among the partners are becoming clear and it’s becoming harder to see global growth not being threatened by this.”
The euro has lost 9 percent this year, according to Bloomberg Correlation-Weighted Indices. The US dollar has gained 7.2 percent and the yen has advanced 7.9 percent.
The pound slid 1.8 percent to US$1.4536, its third weekly decline versus the US dollar, amid speculation that the UK’s governing coalition may collapse by year-end.
Asian currencies appreciated this week, led by Malaysia’s ringgit and South Korea’s won, on signs the region’s economic growth is gathering pace, bolstering demand for emerging-market assets.
The ringgit strengthened 2.4 percent this week to 3.1955 per dollar in Kuala Lumpur, the biggest five-day gain since October last year, according to data compiled by Bloomberg. South Korea’s won rose 2.2 percent to 1,130.93, and the Philippine peso climbed 1.7 percent to 44.76.
Yuan forwards appreciated 0.6 percent this week, the biggest five-day gain since December, on speculation the second US-China Strategic and Economic Dialogue in Beijing on May 24-25 will foster currency appreciation.
The New Taiwan dollar declined on Friday, erasing earlier gains, on speculation policy makers intervened to curb currency appreciation and support exports.
The NT dollar edged down 0.2 percent to NT$31.848 against its US counterpart as of the 4pm close on Friday, according to Taipei Forex Inc. It ended last week at NT$31.850.
The NT dollar has appreciated 0.4 percent this year as overseas investors bought US$2.2 billion more Taiwan equities than they sold.
Elsewhere, Thailand’s baht traded at 32.38 versus the US currency, compared with 32.35 on May 7. Indonesia’s rupiah climbed 1.3 percent to 9,105 and India’s rupee appreciated 0.6 percent to 45.23.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique