Euro weak on eurozone debt crisis concern
TOKYO: The euro remained weak against the dollar and yen in Asian trade Thursday as new worries over Europe’s fiscal woes prompted traders to look for safer bets.
The single currency bought $1.3136 and 108.12 yen in Tokyo in the morning, compared with $1.3141 and 108.35 yen in New York late Wednesday. The dollar edged down to 82.28 yen from 82.46 yen.
On Wednesday, the euro unit hit $1.3107 at one stage, its lowest level since March 16 as Spain’s borrowing costs rose sharply at a disappointing bond sale, its first since passing a tough austerity budget last week.
A key survey on Wednesday also showed that eurozone private sector activity retreated in March, fresh evidence that the 17-nation bloc was in recession.
Junichi Ishikawa, forex analyst at IG Market Securities in Tokyo, said the euro could test the $1.3000 mark as dealers seek out safer assets.
Risk appetite was also subdued ahead of Friday’s US non-farm payrolls data and the Easter holiday weekend, he told Dow Jones Newswires.
“With the prospect of little additional monetary policy accommodation globally and despite the signs of modest global growth, markets have refocused on the worst-case scenario,” National Australia Bank said in a note.
“A rotation back to euro-area worries sees equities and commodities slump, the dollar rally and yields (outside the EU periphery) fall,” it said.
“Europe’s woes never really went away, and it was nice while it lasted, but we are returning to the inevitable discussion of who’s next.”
The European Central Bank on Wednesday ruled out winding down its anti-crisis measures for now and kept key interest rates at record lows, after regional finance ministers reached a deal on expanding a so-called firewall to battle the eurozone’s debt crisis.
ECB chief Mario Draghi also said it was “important to keep in mind that all our non-standard monetary policy measures are temporary in nature and that all the necessary tools are available” to fight inflation if it got out of hand.
That was a signal that the ECB would not hesitate to raise rates if it felt that new liquidity being pumped in the financial system posed an inflationary danger. The bank is aiming to keep inflation below 2.0 percent.