BLBG: Euro Declines From Five-Month High Versus Dollar on Concern Over Bank Debt
The euro fell against 15 of its 16 major counterparts as concerns intensified that European nations’ struggles to rein in debt will slow economic growth.
The common currency retreated from a five-month high against the dollar before reports today forecast to show German consumer prices fell and French household spending declined. Ireland will disclose this week the final costs of bailing out Anglo Irish Bank Corp. The yen rose from an eight-week low against the euro as global stock losses boosted demand for Japan’s currency as a refuge.
“Europe’s economy is suffering a chronic disease,” said Tetsuya Inoue, chief researcher for financial markets at Nomura Research Institute in Tokyo, a unit of Japan’s largest brokerage. “Rescue measures may help, but won’t likely solve problems quickly. Investors may find it hard to buy” the euro in the long term.
The euro was at $1.3431 as of 8:10 a.m. in Tokyo from $1.3455 in New York yesterday, when it touched $1.3507, the highest level since April 20. The yen traded at 113.21 per euro from 113.41, after reaching 113.97 yesterday, the weakest since Aug. 3. The dollar traded at 84.29 yen from 84.29.
The U.S. currency has dropped 8.9 percent versus the euro this quarter, the worst performance among 16 major counterparts, paring this year’s advance to 6.6 percent.
Germany’s consumer price index, calculated using a harmonized European union method, fell 0.2 percent in September, according to the median estimate of economists in a Bloomberg News survey before the government’s data due today. Consumer spending in France dropped 0.2 percent in August, according to another survey.
European Central Bank President Jean-Claude Trichet told lawmakers in Brussels yesterday that economic growth and inflation in the euro region will remain moderate, signaling the bank has no plans to raise interest rates soon.
The MSCI World Index fell 0.2 percent and the Standard & Poor’s 500 Index dropped 0.6 percent yesterday.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
