Euro plunges amid Greece deficit crisis

currencies

The euro plunged to a one-year low against the yen in Asia yesterday as investors shunned riskier currencies for the safe-haven Japanese unit amid the public deficit crisis afflicting Greece.
The euro fell to 120.44 yen briefly, its lowest level since Feb. 24, 2009, before changing hands at 120.63 yen in Tokyo afternoon trade. The rate was sharply down from 122.03 yen in New York late Wednesday.
The euro dropped to US$1.3460 from US$1.3534.
Because euro-selling for the Japanese currency involves selling dollars for yen in the process, the U.S. unit also slipped to the lowest levels in some two weeks.
The greenback fell to 89.47 yen, its weakest since Feb. 10, down from 90.12 yen in New York.
The euro took a beating on news overnight that Standard & Poor's Rating Services warned of downgrading Greece by one or two notches within the next month, dealers said.
The Wall Street Journal also reported yesterday that any bailout for Spain - whose US$1.6-trillion economy is nearly double those of troubled euro-zone partners Greece, Portugal and Ireland combined - would be far costlier.
"Although the report wasn't a particularly new topic, hedge funds, retail and institutional players took cues from it" on mounting concern that other areas in Europe may also suffer similar fiscal problems, a dealer said.
The single currency's plight triggered a decline in the pound, which fell to a 10-month low of 137.25 yen, compared with 138.80 yen Wednesday, and to a nine-month low at US$1.5325 from US$1.5398.
The dollar also lost ground against the yen after U.S. news of weak home sales data and remarks by Federal Reserve chairman Ben Bernanke that the central bank was not yet ready to abandon its ultra-low interest rates.
The dollar rose to 1,160.30 South Korean won from 1,152.15 on Wednesday, to 1.4112 Singapore dollars from 1.4087, and to 9,355.00 Indonesian rupiah from 9,310.00.
The greenback also firmed to 46.28 Philippine pesos from 46.12 while falling to NT$32.04 from NT$32.08.