BLBG:Euro Falls Against Peers as IMF Says Asset Sales Needed
The euro fell against a majority of its major peers after the International Monetary Fund said Europe’s banks may need to sell more assets through 2013 if policy makers fail to stem the fiscal crisis.
The shared currency erased a drop to the lowest level in more than a week against the yen after French and Italian industrial production unexpectedly rose. Spain’s Prime Minister Mariano Rajoy meets French President Francois Hollande today in Paris as investors weigh whether the Iberian nation will ask for a bailout. South Africa’s rand surged as transport union members ended a strike. Japan’s Prime Minister Yoshihiko Noda said his government will act against disorderly gains in the currency.
“It’s not like we’ve gone into anything notable in terms of deterioration in confidence, but these issues are coming into focus and it does suggest the potential there for things to reignite in terms of Spain and the sovereign crisis,” said Derek Halpenny, the European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Over the short term, the upside in the current market environment of no news is limited” for the euro.
The euro was little changed at $1.2889 at 8:09 a.m. New York time, after earlier touching $1.2835, the lowest since Oct. 1. It rose 0.1 percent to 100.96 yen, after sliding to 100.44, also the least since Oct. 1. The yen was little changed at 78.34 per dollar.
Failure to implement fiscal tightening or set up a single supervisory system in the timing agreed could force 58 European Union banks from UniCredit SpA (UCG) to Deutsche Bank AG to shrink assets by as much as $4.5 trillion, the IMF said in its Global Financial Stability Report. That’s up 18 percent from its April estimate and would hurt credit and crimp growth next year in Greece, Cyprus, Ireland, Italy, Portugal and Spain, Europe’s so- called periphery.
To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net; John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
