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Euro Falls to 12-year Low against Yen Amid Rising Spanish Worries |
24 July 2012The euro nears a historic low against the Japanese yen, one of the few remaining safe havens in the crisis environment. Spain, the new hot topic in the European debt crisis, suffers a larger-than-expected slowdown, mainly due to a shortfall in consumer spending
The euro tumbled below 95 yen for the first time in almost 12 years yesterday as dealers rushed to the safe-haven Japanese unit owing to growing fears about Spain’s debt crisis. The new figure came amid new negative data from Spain.
The common currency dipped as low as 94.24 yen in afternoon Asian trade -its lowest level since November 2000- from 95.38 in New York trade on July 20.
It was changing hands at 94.44 yen yesterday. Investors must be ready for the euro’s fall below 93 yen this week if it slips below $1.18, said Atsushi Hirano, senior trader at Royal Bank of Scotland in Tokyo. “We don’t have much important economic indicators this week, so we’ll pay attention to stock prices and headlines related to European debt problems,” he said. The euro was also weak against the dollar, trading around two-year lows at $1.2103, while the dollar bought 78.03 yen.
The euro fetched $1.2152 in New York trade on July 20 while the dollar was at 78.48 yen.
Strong yen hurts exports
The Japanese currency, which hit record highs against the dollar last year, has been increasingly viewed as a safe-haven amid worries about Europe and a lumbering U.S. economic recovery. But the strong currency has taken a toll on Japan’s exporters by making their products pricier overseas while shrinking the value of their foreign income.
Officials in Tokyo have repeatedly warned that the yen was overvalued and previously intervened in forex markets in a bid to temper the unit.
“As I’ve been saying, I will take decisive steps against speculative movement of excessive volatility,” Japanese Finance Minister Jun Azumi told reporters.
“As far as the current situation is concerned, I’m watching it carefully,” he said in Tokyo yesterday.
Also yesterday, the government said the Japanese economy faces growing downside risks stemming from the European debt crisis, adding that it was increasingly concerned about the outlook for the nation’s export sector.
Meanwhile, Spain’s economic slump deepened in the second quarter of 2012 as consumers cut back spending, the bank of Spain said yesterday. Gross domestic product shrank 0.4 percent in the second quarter from the previous three months, after contracting 0.3 percent in the first, the central bank said in its latest monthly bulletin.
However, Spain does not need a full bailout, the economy minister said yesterday.
Asked by journalists if he ruled out the possibility of a full bailout, after a 100 billion euro EU deal on the banks was agreed on July 20, Luis de Guindos said: “Of course.” “In this period of uncertainty, of volatility, there is an irrational atmosphere (on the markets),” de Guindos said. |
24 July 2012
Hurriyet Daily News
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