Dawn News

Euro slides in Asian trade as caution weighs

Fears also prevail over Greek elections on Sunday with economists fretting the debt-wracked country will exit the eurozone if anti-austerity parties win. - File photo

TOKYO: The euro eased against the dollar in Asian trade on Wednesday as traders awaited eurozone economic data later in the day and after Spanish borrowing rates soared to record highs.

The euro bought $1.2492 in Tokyo afternoon trade, down from $1.2502 in New York late Tuesday.

Against the Japanese currency, the common European unit inched up to 99.53 yen from 99.44 yen in New York while the dollar firmed to 79.63 yen from 79.52 yen.

Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, said the euro could take a further hit if eurozone industrial production data for April comes in weaker than expected.

But she told Dow Jones Newswires: “Even if figures are better than market forecasts, we believe it won't help improve the euro's weak trend.”Bank of Japan governor Masaaki Shirakawa said Wednesday the European crisis was “the biggest risk factor” for the global and Japanese economies as it affects exports to Europe and currency rates while shaking financial markets.

“We will check out carefully what impact the European situation is having on the economy and price movements,” he told a parliamentary committee.

The central bank is to start a two-day policy meeting Thursday amid speculation on whether it will take further easing measures.

On Tuesday, Spain's benchmark 10-year government bond yield spiked to 6.834 per cent, the highest since the creation of the euro, before easing to 6.716 per cent -- a figure still regarded as unsustainable over the longer term.

Yields on 10-year Italian government bonds also jumped over persistent questions about Rome's ability to tackle its massive fiscal problems.

Markets have turned increasingly doubtful over a 100 billion euro ($125 billion) bailout plan to rescue Spain's troubled banking sector, while Fitch Ratings on Tuesday downgraded 18 more Spanish banks a day after cutting its ratings on the nation's two biggest lenders.

There are also fears about Greek elections on Sunday with economists fretting the debt-wracked country will exit the eurozone if anti-austerity parties win.

The dollar was mixed against other Asian currencies.

It sank to 1,167.60 South Korean won from 1,168.30 on Tuesday, to Sg$1.2820 from Sg$1.2829, to 31.61 Thai baht from 31.66 baht and to 42.72 Philippine pesos from 42.97 pesos.

The greenback inched up to Tw$29.96 from Tw$29.94, and to 9,461.00 Indonesian rupiah from 9,450.00 rupiah.

The dollar fetched 56.88 Indian rupees while the Australian dollar bought 99.46 cents.

The Chinese yuan was trading at 12.47 yen against 12.44 yen the previous day.

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