BLBG:Euro Drops To 11-Year Low Versus Yen Before Spain Auction
The euro weakened to a more than two-year low against the dollar, falling through $1.21, as concern mounted that European leaders are failing to gain control of the region’s debt crisis.
The 17-nation currency dropped to less than its lifetime average versus the dollar, and slid to the lowest level in more than 11 years against the yen. Six Spanish regions may ask for aid from the central government, El Pais reported, propelling the nation’s 10-year bond yield to a euro-lifetime high. The Swiss franc declined against the dollar, depreciating through 99 centimes for the first time since December 2010.
“I see euro parity against the dollar,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “Spanish yields surging to records indicate a lack of confidence in finding a solution to the crisis, which is weighing on the currency.”
The euro tumbled to as low as $1.2082, below the average $1.2087 for the shared currency since its inception in 1999, and was 0.5 percent lower at $1.2097 at 9:19 a.m. in London. It slid as much as 1.3 percent to 94.24 versus the yen, the least since November 2000. The yen rose 0.6 percent to 78.04 per dollar, after strengthening to 77.94, the most since June 1.
The franc dropped as much as 0.6 percent against the dollar to 99.39 centimes, the weakest level since Dec. 3, 2010.
‘We are eyeing dollar-franc parity on the back of further deterioration in investor confidence in Europe,” said Peter Rosenstreich, the chief currency analyst at Swissquote Bank SA in Geneva.
Aid Request
Spain’s Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais wrote, without citing anyone. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to access the recently created emergency-loan fund that Valencia said it would use last week, the newspaper said.
The yield on the nation’s 10-year bond jumped as much as 30 basis points, or 0.30 percentage point, to 7.57 percent before the government auctions three- and six-month bills tomorrow. U.S. five-, 10- and 30-year Treasury yields dropped to records, as did rates on U.K. two-year gilts, two-year Finnish notes and five-year debt for Sweden.
The euro has slumped 5.7 percent this year, the worst performance among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. New Zealand’s dollar rose 3.9 percent, the best performer, with the Australian dollar up 2.9 percent and the greenback rising 1.9 percent.
To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
