Euro Falls on Greek Deadlock

Monday, 14 May 2012 08:10 PM

 

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The euro fell to an almost four-month low amid mounting doubts that Greece can avoid an exit from the currency union as the region’s finance ministers meet for a second day in Brussels.

Greek President Karolos Papoulias will call a meeting of leaders of all parliamentary parties except for an ultra- nationalist party today to make the case for a government of prominent non-politicians. The 17-nation currency traded 0.1 percent from a three-month low against the yen before a report forecast to show Europe’s economy contracted. Demand for the Australian dollar was limited before the central bank releases minutes of its last meeting when it cut interest rates by 50 basis points.

“The intense uncertainty in Greece is hard to see coming out well for risk appetite at this point,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “Looking at the fundamentals and at the developments in Europe, it’s all very bearish for the euro.”

The euro traded at $1.2831 as of 7:55 a.m. in Tokyo from $1.2823 at the close in New York, after earlier sliding to $1.2816, the weakest level since Jan. 18. The currency was little changed at 102.48 yen from 102.39 yesterday, when it reached 102.23, the lowest since Feb. 16. The yen was at 79.87 per dollar from 79.85.

Australia’s dollar added 0.1 percent to 99.72 U.S. cents from 99.58 yesterday.

Greek Talks

Alexis Tsipras, who heads Greece’s anti-bailout Syriza party and rejected a unity government following last week’s inconclusive election, boycotted yesterday’s meeting called by Papoulias. Tsipras will attend today’s meeting, state-run NET TV reported. Greece may face new national elections unless a government is formed.

Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid. “The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday.

The euro-region’s gross domestic product probably fell 0.2 percent in the first quarter from the previous three-month period when it contracted 0.3 percent, according to economists surveyed by Bloomberg News before the European Commission releases data today.

Europe’s shared currency dropped 4 percent in the past six months, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 1.9 percent, and the yen lost 2.1 percent.

 


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