BLBG: Euro Falls for Sixth Day as Greek Deficit Worse Than Estimated
By Ben Levisohn and Paul Dobson
April 22 (Bloomberg) -- The euro fell for a sixth straight day against the dollar as the European Union said Greece’s deficit in 2009 was worse than previously estimated, increasing the prospect of the nation accepting a bailout.
Greece’s benchmark 10-year bond yield increased to 8.564 percent, more than twice the rate on benchmark German bunds, indicating a higher perception of risk. The dollar pared its loss against the yen as an industry report showed existing-home sales increased in March more than economists forecast.
“The euro is inherently weak,” said Lane Newman, director of foreign exchange at ING Groep NV in New York. “What’s going on in Europe with sovereign borrowing and the true European reluctance to bail out profligate spenders will run the show for the next few weeks.”
The euro dropped 0.8 percent to $1.3286 at 10:17 a.m. in New York, from $1.3390 yesterday. The currency fell 1 percent to 123.55 yen, from 124.77 yen. The dollar decreased 0.2 percent to 92.98 yen, from 93.19 yen.
Europe’s currency has weakened 7.1 percent against the dollar this year on concern Greece’s difficulty in containing its budget deficit will spread.
Statistics from the EU showed Greece’s deficit was 13.6 percent of gross domestic product last year, higher than the government’s April forecast of 12.9 percent, as the nation’s leaders met with European counterparts to discuss a proposed aid package. Ireland overtook the southern European nation as the EU member with the largest deficit, at 14.3 percent.
Greece Debt Outlook
Greece’s Prime Minister George Papandreou’s government is likely to cut or delay payments to bond investors even as the nation negotiates the terms of a rescue package, Goldman Sachs Group Inc.’s chief European economist, Erik F. Nielsen, wrote in a research report.
President Barack Obama speaks today at New York’s Cooper Union, where he will take aim at “risky decisions” made on Wall Street, according to his spokesman.
“Financial reform is something that is born out of an economic collapse that started on Wall Street and spread to Main Street America,” White House press secretary Robert Gibbs said, previewing the president’s address.
Sales of U.S. previously owned homes rose in March for the first time in four months as buyers took advantage of a government tax credit and the weather improved.
Purchases climbed 6.8 percent to a 5.35 million annual rate last month, from a 5.01 million pace in February, figures from the National Association of Realtors showed today. The median forecast of 76 economists in a Bloomberg News survey was for an increase to a 5.29 million annual rate from a previously reported 5.02 million.
To contact the reporters on this story: Ben Levisohn in New York at blevisohn@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net
