Euro Reaches Three-Month Low on Eastern Europe Banking Concern
The euro reached the lowest level against the dollar in three months on speculation financial turmoil in eastern Europe may deepen the recession in the 16 nations that use the currency, Bloomberg reported.
The yen fell for a fourth week against the dollar and dropped versus the euro as the biggest contraction in Japan's economy since the 1974 oil shock eroded demand for the currency as a haven from the global recession. Mexico's peso tumbled to a record low versus the dollar after the central bank cut the target lending rate less than economists forecast.
"We are now moving very specifically to euro concerns," said Simon Derrick, chief currency strategist in London at Bank of New York Mellon Corp., in an interview on Bloomberg Television. "The idea that we could see another 10 percent drop in the euro makes perfect sense to me."
The euro fell 0.3 percent this week to $1.2826 from $1.2862 on Feb. 13. The currency touched $1.2513 on Feb. 18, the lowest level since Nov. 21, and lost 8.2 percent in 2009. The yen declined 1.5 percent to 93.35 per dollar from 91.93, touching 94.46 on Feb. 19, the weakest level since Jan. 6. The yen lost 1.1 percent to 119.68 against the euro from 118.37.
Mexico's peso dropped 1.5 percent to 14.7774 versus the dollar and touched $14.9855, the weakest level ever, after the central bank cut the target lending rate yesterday by a quarter- percentage point to 7.50 percent. The median forecast of 24 economists surveyed by Bloomberg News was for a reduction of a half-percentage point.