BLBG: Euro Declines as Spain, Portugal Yields Climb, Irish Trading Costs Rise
The euro dropped against most of its counterparts as rising borrowing costs in Spain and Portugal stoked concern that the region’s sovereign-debt crisis will worsen.
Europe’s 16-nation currency posted its fourth straight drop against its U.S. peer, set for its longest streak of losses in more than three months, as LCH Clearnet Ltd. demanded clients place larger deposits to trade Irish debt. The euro fell against 12 of its 16 most-traded peers. The yen was near the strongest in two months against the euro amid speculation that China will take fresh measures to combat inflation. Sweden’s krona declined against the dollar and euro after consumer confidence declined.
“The euro is under pressure and there’s more to come,” said Neil Mellor, a currency strategist in London at Bank of New York Mellon Corp., the world’s biggest custodian of financial assets. “Real-money flows are leaving the periphery and have been for quite some time.”
The euro slipped 0.1 percent to $1.3310 at 11:22 a.m. in London from $1.3335 in New York yesterday, when it fell to $1.3285, the weakest since Sept. 22. It hasn’t declined on four consecutive days since Aug. 24. The euro bought 111.20 yen from 111.40. Japan’s currency was at 83.65 per dollar from 83.54.
Spanish 10-year yields rose 12 basis points to 5.21 percent and Portuguese six basis points to 7.23 percent.
LCH Clearnet raised the extra margin requirement it charges for Irish bond trading to 45 percent of net positions. Ireland this week became the second euro-area country to seek a financial bailout from the European Union and the International Monetary Fund as the yield premium investors demand to hold the nation’s debt instead of German bonds surged.
The krona slipped 0.2 percent to 9.2785 against the euro and was 0.5 percent weaker at 6.9796 per dollar.
An index measuring confidence fell to 22.6 in November from 23.4 the previous month, the Swedish National Institute of Economic Research said in a report published today. Manufacturing confidence rose to 8 from 5, NIER said.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
