Tags: Euro | Tumbles | Greece | Drop | Currency

Euro Tumbles Most in Year After Report Greece May Drop Currency

Friday, 06 May 2011 02:49 PM

The euro tumbled the most in a year against the dollar on speculation Greece may stop using the currency, bolstering concern the nation’s debt crisis will spread through the region.

Europe’s shared currency fell against all of its 16 most-traded counterparts even after Greece denied a report in Der Spiegel magazine that said the European Commission called a meeting to discuss the situation. The dollar also rose against the yen after U.S. employers added more jobs than forecast, boosting speculation the recovery in the world’s biggest economy will accelerate.

“It does bring to the forefront the existential concerns about the euro, said Samarjit Shankar, a managing director for the foreign-exchange group in Boston at Bank of New York Mellon. “It underscores the risks that have never really gone away but had gone to the back burner.”

The euro dropped 1.5 percent to $1.4319 at 2:39 p.m. in New York, from $1.4539 yesterday. It touched $1.4317, the lowest level since April 19, and has dropped as much as 3.5 percent since May 4, the biggest two-day decline since May 2010. The common currency fell 1 percent to 115.23 yen, from 116.44. The dollar gained 0.5 percent to 80.44 yen, from 80.07.

Greece isn’t considering abandoning use of the euro, the Athens-based Finance Ministry said in an e-mailed statement today on the Der Spiegel report. Such reports have been repeatedly denied in the past by Greece and governments of other European Union countries, the statement said.

A spokesman for Luxembourg’s Jean-Claude Juncker, who leads euro-region finance ministers, denied the report.

Finance Meeting

European finance officials are gathering in Luxembourg today for an unscheduled meeting, said two European officials familiar with the situation. The officials couldn’t immediately say what the subject of the discussions would be. One of the officials said it was unlikely that the topic would be as serious as a Greek withdrawal from the currency bloc.

Currencies of commodity exporters were the top performers against the greenback today after the U.S. payrolls report. Gains were capped as raw materials including crude oil erased early advances.

Australia’s dollar gained for the first time in five days, strengthening 0.9 percent to $1.0671. New Zealand’s dollar rose 0.5 percent to 78.81 U.S. cents in its first increase in five days, while the Brazilian real appreciated 0.3 percent to 1.6177 per dollar.

Greek bond yields and the cost of insuring the country’s securities against default rose to records last week, rekindling concern that a debt write-off or extension of repayment terms may be needed to ease the nation’s fiscal crisis.

Refinancing Needs

Greece’s refinancing needs of 58 billion euros are covered this year by the loan package it received in 2010 from the European Union and International Monetary Fund. Next year, the nation is supposed to regain market access and refinance at least three-quarters of its maturing medium- and long-term debt, and then fully fund debt rollovers beginning in mid-2013.

Even under cuts imposed as a bailout condition, Greece’s debt is forecast to climb to 159 percent of gross domestic product in 2012. The government estimates the economy will shrink for a third year in 2011 before returning to growth in 2012.

“The saga continues to unfold,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “If you can get rid of debts and clean up the balance sheet, it’s long-term positive for the euro.”

IntercontinentalExchange Inc.’s Dollar Index, used to track the greenback against the currencies of trading partners including the euro and yen, rose 0.8 percent to 74.808.

U.S. payrolls increased by 244,000 workers last month, the biggest gain since May 2010, after a revised 221,000 gain the prior month, the Labor Department said today in Washington. Economists projected an April rise of 185,000, according to the median estimate in a Bloomberg News survey. The jobless rate rose to 9 percent, the first increase since November.

© Copyright 2017 Bloomberg News. All rights reserved.

1Like our page
2Share
StreetTalk
The euro tumbled the most in a year against the dollar on speculation Greece may stop using the currency, bolstering concern the nation s debt crisis will spread through the region.Europe s shared currency fell against all of its 16 most-traded counterparts even after...
Euro,Tumbles,Greece,Drop,Currency
649
2011-49-06
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved