The euro fell from the highest in more than three weeks against the dollar on concern a deal for Greece to buy back its bonds may falter, holding up disbursements of bailout funds to the nation.
The shared currency also reversed gains versus the yen. Euro-area finance chiefs and the International Monetary Fund said they would consider cutting Greece’s interest rates and giving it more time to pay back rescue loans after the repurchase of government debt. The Swedish krona declined at least 0.5 percent versus all 16 of its major peers after consumer confidence and results of an economic survey were weaker than economist forecasts.
“There is uncertainty regarding the debt buyback,” said Gavin Friend, a London-based currency strategist at National Australia Bank Ltd. “It looks as though Greece wants to pursue a buyback at some point between now and Dec. 13. We don’t quite know how much that’s going to contribute and it looks as though the IMF is saying part of the deal is contingent upon the success of that buyback.”
The euro fell 0.2 percent to $1.2947 at 6:39 a.m. New York time after advancing to $1.3009, the strongest since Oct. 31. It dropped 0.2 percent to 106.23 yen after rising as much as 0.5 percent to 106.96. The Japanese currency was little changed at 82.06 yen per dollar.
Euro-group ministers would consider taking steps to ease Greece’s bailout terms “after having been reassured of the authorities’ resolve to carry the fiscal and structural reform momentum forward and with a positive outcome of the possible debt buyback operation” they said in a statement after yesterday’s meeting.
Deadline
The parliaments of three of the euro area’s AAA rated countries -- Germany, Finland and the Netherlands -- insisted on approving the accord, with Dec. 13 set as the deadline for a formal decision to unlock the next Greek aid tranche.
“The Greek deal was pretty much as the market expected,” said Raghav Subbarao, a currency strategist at Barclays Plc in London. “The likelihood of a Greek default in the near term was priced to be very low and will pretty much go to zero once Greece has the cash in hand.”
The euro has fallen 2.3 percent this year, the second-worst performer among the 10 developed-market currencies after the yen, according to Bloomberg Correlation-Weighted Indexes. The yen has weakened 8.9 percent and the dollar has lost 2.1 percent.
Greek Finance Minister Yannis Stournaras said the decision “keeps Greece in the euro.” IMF Managing Director Christine Lagarde said the nation will get an extra 15 years to repay loans.
Debt Burden
Germany’s finance minister, Wolfgang Schaeuble, said a debt buyback program was agreed in an effort to “significantly” lower Greece’s debt burden by 2020. He said his euro-region counterparts didn’t discuss a debt cut for the Mediterranean nation.
The euro erased an earlier advance after Federal Reserve Bank of Dallas President Richard W. Fisher said accommodative policies can’t be left in place forever and limits should be set on U.S. stimulus known as quantitative easing, boosting demand for the U.S. currency.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, was little changed at 80.338 as the U.S. Congress returns this week to discuss the so-called fiscal cliff of spending cuts and tax increases set to take effect in January.
Lawmakers are trying to avert the fiscal cliff to prevent a short-term shock to the economy and reach an agreement on long- term deficit reduction.
The krona fell for the first time in five days against the euro, declining 0.8 percent to 8.6438, after Swedish consumer confidence fell for a fourth month in November. The central bank in October signaled it may next month cut interest rates for a fourth time since December as it predicts the Nordic region’s largest economy will suffer from falling demand from Europe.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
