WSJ:WORLD FOREX: Euro Suffers Year-End Blues; Turkish Lira Soars
--Euro falls to lowest level against yen since June 2001, below Y100
--Euro under pressure against other currencies amid thin liquidity
--Turkish lira rockets as central bank steps up pressure on currency weakness
--Polish monetary policymaker says rates likely to be on hold in January and February
By Jessica Mead
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--The euro sank to its lowest level against the Japanese yen since June 2001 in European hours Friday but extremely thin dealing conditions protected the single currency from a broad-based selloff during the last trading session of 2011.
The euro remained under the cosh against other currencies, hovering just above its 2011 lows against the dollar and slipping to its lowest level against the Swiss franc since Nov. 4, but investors were reluctant to add to any negative bets on the currency amid thin volumes.
"While most investors have probably pared back exposure approaching the end of the year, what positions there are appear to be biased to the downside, which may go some ways to explaining why the euro has been unable to extend losses," said Todd Elmer, currency strategist at Citigroup.
The fall in the euro against the yen also weighed on the dollar. It fell as low as Y77.28 against the Japanese currency, extending losses suffered in Asian hours on the back of last-minute settlement orders by Japanese exporters.
Overall, though, the currency markets remained very quiet. Even survey data showing a continued contraction in Chinese manufacturing activity in December failed to have any impact. "It caused a bit of interest, but nothing dramatic," said Steven Saywell, chief currency strategist at BNP Paribas in London
"People are sitting on their hands and waiting until the end of the year," he added.
Still, some excitement came from Turkey, where the central bank intervened to support the wilting lira. The dollar dropped sharply from TRY1.92 to just under TRY1.86 by 1127 GMT as the central bank sold foreign currencies.
Elsewhere, the Polish zloty was weaker against the euro, which traded above PLN4.44, despite zloty-supportive intervention by state-owned bank BGK. Anna Zielinska-Glebocka, a member of Poland's monetary policy council, said Poland's interest rates are likely to remain on hold in January and February as risks to the Polish economy balance each other out. She added that the zloty is currently undervalued but expects it will trail the single currency in 2012.
At 1137 GMT, the euro was trading at $1.2944 against the dollar, compared with $1.2960 late Thursday in New York, according to trading system EBS. The dollar was at Y77.38 against the yen, compared with Y77.62, while the euro was at Y100.18 compared with Y100.70. Meanwhile, the pound was trading at $1.5451 against the dollar, compared with $1.5416 late Thursday in New York.
The ICE Dollar Index, which tracks the greenback against a basket of currencies, was at 80.364 compared with 80.371 late Thursday in New York.
