Euro rises against dollar but slumps against yuan
THE EURO rose against the dollar yesterday but slumped to 10-year lows against China’s yuan.
The euro dropped below 100 yen for the first time since June 2001 in a sixth straight day of decline on concern Europe’s debt crisis will weigh on the region’s economic growth.
The 17-nation currency headed for its first back-to-back annual decreases versus the dollar in a decade.
China’s yuan climbed to a 17-year high on signs the central bank favours the currency’s appreciation to prevent capital outflows.
“There’s fatigue in the sense that the euro zone problems – we thought they’d be fixed partially by now, but obviously they’re not,” said Brian Kim, a currency strategist at Royal Bank of Scotland.
“There’s a modest appetite for risk and there could be a little bit more of a bounce in the year-end.”
The euro fell 0.6 per cent to 100 yen at 11.25am in New York after dropping to 99.84 yen, the lowest level since December 2000.
The yen gained 0.8 per cent to 77 per dollar after reaching 76.91, the strongest since November 22nd.
While the common currency dropped against most of its major counterparts, it rose 0.2 per cent against the dollar to $1.2985 after falling as much as 0.4 per cent earlier.
Europe’s shared currency may weaken to 99 yen in the first quarter of 2012, according to the median forecasts of 35 analysts in a Bloomberg News survey.
The shared currency will weaken to $1.28 in the second quarter of next year, according to a separate survey of 41 analysts.
Two years of summits have failed to contain a European debt crisis that has led to bailouts of Greece, Ireland and Portugal and now threatens Italy and Spain.
French president Nicolas Sarkozy will go to Berlin on January 9th to resume talks with German chancellor Angela Merkel to end the turmoil, according to an official familiar with the matter.
The leaders aim to complete revisions to Europe’s fiscal rulebook by March, following decisions made at a December 9th summit, and are reassessing plans to cap the overall lending of their permanent rescue facility at €500 billion.
“The backdrop is still the euro zone debt crisis and concerns about growth,” said Peter Rosenstreich, chief currency analyst at Swissquote Bank in Geneva. – (Bloomberg)