Concerns that the European debt crisis is escalating have seen the euro falling to the lowest level in over a decade against the yen.
With the Greek government yet to reach an agreement over how its bailout targets are to be met, and with yet more bad news emerging from Spain, the search for a safe haven has led to the euro declining against the yen and the dollar for the fourth consecutive day.
According to Bloomberg Correlation- Weighted Indexes, over the past three months the yen has climbed 8.8 per cent against nine developed nation equivalents whilst during the same period the euro has dropped 5.1 per cent.
The euro brushed 94.41 yen, trading at 94.47 as of 7.03 a.m. this morning. Not since November 2000 have the figures been so low. The yen also climbed to 78.09 against the dollar, its strongest showing against the latter currency for over a month,.
According to Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co; ‘The yen is expected to remain strong among the major currencies as the least bad choice.’
Amid reluctance across the euro-zone to offer Greece more financial props, there are serious concerns that the country will be unable to fulfil the debt cutting terms of its rescue aid agreement, and that the International Monetary Fund will stop payments accordingly. Tomorrow the IMF will return to Athens with the other members of the Troika (The European Central Bank and the European Commission) for more discussion of just how Greece plans to honour its commitments.
This weekend also saw growing concerns for Spain with the announcement that the closing half of this year will usher in15 billion euro’s of debt redemptions for the country’s regions. On Friday the region of Valencia declared it would require financial aid, and since that announcement the cries for help have continued. The Murcia region, along with half a dozen others, has intimated that they will also require funding. Catalonia has yet to decide whether it will follow Valencia’s lead and dip into the emergency loan pool, but as one of the most indebted regions in the country there can be little doubt that it will need assistance sooner rather than later.
It seems likely that the yen will continue to gain against the risky common currency. As a Tokyo Director of Foreign Exchange noted, ‘There is nothing good from Europe and that keeps the euro under pressure’.
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