Euro under heavy pressure in Asian trade

Published May 18, 2012 05:02am

Fitch Ratings downgraded Greece's credit a notch Thursday, to CCC from B- and rival agency Moody's cut the debt ratings of 16 Spanish banks by one to three notches. - Reuters photo

 

TOKYO: Traders piled pressure on the euro in Asian trade Friday as political and economic turmoil in Europe sent investors fleeing from the single currency with the yen eyed as a safe haven.

The euro stood at 100.72 yen, almost flat from 100.65 yen in New York, which was the unit's weakest level since early February as US trade saw it tumble from above the 102 level on Thursday.

The single currency also lost ground against the dollar, slipping to $1.2681 from $1.2693 in New York.

The dollar was changing hands at 79.41 yen, nearly flat.

The 17-nation eurozone's common currency suffered amid a credit rating downgrade on debt-riddled Greece and 16 Spanish banks, raising fresh fears about the continent's fiscal woes and a possible eurozone exit for Greece.

The Japanese currency was also buoyed by official data released Thursday showing Japan's economy grew by a faster-than-expected 1.0 per cent in the three months to March on the previous quarter.

“Japan's first quarter GDP figures were strong, so the yen is the beneficiary of both Japan's own economic fundamentals as well as flight from the dollar and the euro,” said Daisuke Uno, strategist at Sumitomo Mitsui Banking Corp.

The yen's strength may not be a short-term phenomenon, with Japan's embattled economy looking relatively strong compared with others, he added.

“Over the next month, a dollar fall to the 77-yen level is conceivable,”Uno said.

Japanese Finance Minister Jun Azumi reiterated his call to tame the yen, vowing on Friday to act “appropriately” if necessary, raising the possibility of another currency market intervention.

“We will watch the foreign exchange markets with a greater sense of caution and act appropriately when necessary,” he told a regular press briefing in Tokyo.

“In particular, there were volatile movements in the currency markets overnight, with the dollar falling rapidly from the low 80s to the low 79s against the yen,” he said.

Fitch Ratings downgraded Greece's credit a notch Thursday, to CCC from B- and rival agency Moody's cut the debt ratings of 16 Spanish banks by one to three notches.

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