Euro drops ahead of EU summit on debt
Azerbaijan, Baku, March. 23 / Trend /
The euro declined for a second day against the dollar on concern European Union leaders meeting this week will struggle to find a permanent solution to the region's fiscal crisis, Bloomberg reported.
The single currency weakened versus 13 of its 16 major counterparts on speculation Portugal's government will collapse today as parliament votes on budget cuts that have divided lawmakers. The pound was about 0.2 percent from the strongest level in a year against the greenback before the Bank of England releases minutes of this month's policy meeting.
"European countries will have to restructure their finances, causing demand to weaken in their economies," said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan's second-largest publicly traded lender. "This weighs on the euro."
The euro fell to $1.4170 as of 6:51 a.m. in London from $1.4196 in New York yesterday, when it weakened 0.2 percent. The pound advanced to 86.57 pence per euro from 86.75 pence and was unchanged at $1.6364 from yesterday when it advanced to $1.6401, the highest level since January 2010.
EU leaders are divided over how to let a stopgap fund spend its full capacity of 440 billion euros ($624 billion) to ease the region's credit woes as a March 24-25 summit approaches. Policy makers have settled on a permanent rescue fund able to lend 500 billion euros as of 2013.
"A larger rescue package isn't a fundamental solution to the region's debt problems," said Mizuho Corporate's Karakama. "Even if the rescue fund increased to 5 trillion euros, there wouldn't be any difference in need for fiscal consolidation."