The euro slumped to a record low against the Swiss franc amid speculation a Greek austerity plan and a European Union pledge to stabilize the region’s economy won’t resolve its sovereign-debt crisis. The shared currency fell versus the majority of its 16 most-traded peers after a lawmaker from Greece’s ruling Pasok party said he hasn’t decided to vote for the country’s new fiscal measures and Italian bank stocks slumped amid concern the crisis may spread. South Africa’s rand tumbled on prospects for the euro region, the nation’s largest trading partner. Australia’s dollar advanced as a central bank official said inflation may quicken. “It’s still not a foregone conclusion that the vote is going to go through, so that is weighing on sentiment and weighing on the euro,” said Mark McCormick, a New York-based currency strategist at Brown Brothers Harriman & Co. “You have more negative sentiment being fed directly from the euro-zone periphery.” The euro dropped 0.6 percent to 114.13 yen at 5 p.m. in New York, from 114.78 yen yesterday. It fell 1.1 percent to 1.18264 Swiss francs, after sliding as much as 1.3 percent to a record 1.1806. The common currency weakened 0.5 percent to $1.4188, from $1.4256. The dollar slipped 0.1 percent 80.43 yen, compared with 80.51 yen. Rand Drops South Africa’s currency was the biggest loser against the dollar, falling 0.9 percent to 6.9005 per dollar, from 6.8358. It posted a weekly decline of 2.1 percent. The rand dropped 0.4 percent to 9.7907 per euro, from 9.7477. The euro region accounts for 45 percent of South Africa’s exports and 34 percent of its imports, government data show. The rand closely tracks the euro, with a correlation of 0.683 this quarter. A value of 1 would mean they moved in lock step. The shared currency weakened as Italy’s two largest banks, UniCredit SpA and Intesa Sanpaolo SpA, led a drop in bank stocks in Milan. Trading in both firms’ shares was briefly suspended after breaching limits on intraday swings. Moody’s Investors Service said yesterday it may downgrade 13 Italian banks because they would be vulnerable to a cut in the government’s credit rating. The firm said last week Italy’s ratings may be cut because of slowing economic growth and the potential for Europe’s debt crisis to drive up borrowing costs. EU leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou, who won a confidence vote this week by 155-143, pushes through a package of budget cuts and asset sales. Focus on Euro “There’s nothing going on but euro today,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “Everybody seems to know what’s expected over the next few days; the difficulty is achieving it. The passage of the confidence vote was pretty slim, and all of Papandreou’s party members backed it, but you can’t assume the same will happen now.” Greek lawmakers must approve the 78 billion-euro ($111 billion) austerity package in a vote next week to receive a fifth loan payment under an existing bailout, as well as future financing. Failure to secure aid would push Greece to the brink of default, with the country needing the funds to cover 6.6 billion euros of maturing bonds in August. Thomas Robopoulos, a lawmaker from the Pasok party, said he hasn’t decided whether he’ll vote for the government’s medium- term fiscal plan and implementation law next week. He said by telephone today he’s leaning toward voting against it. ‘Dwindling Away’ “The majority that they had for the confidence vote on Tuesday of 155 seems to be dwindling away,” said Brown Brothers’ McCormick. European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. Morgan Stanley strategists advised selling the euro against the dollar, betting it will weaken to $1.36. The euro earlier rose after the Ifo institute said its business climate index for June, based on a survey of 7,000 executives, increased to 114.5 in June from 114.2 in May. The 17-nation currency posted its third weekly decline against the dollar, the longest losing streak since February. It fell for a third week against the yen, the longest in five months. The Australian dollar gained against half its major peers after Reserve Bank of Australia Assistant Governor Philip Lowe said that the nation’s biggest mining boom in a century risks accelerating inflation. ‘Significant Boom’ “We are looking at a significant boom in investment in the resources sector at a time when the overall economy has relatively little spare capacity,” Lowe said in a speech at a BankSA Trends forum in Adelaide, Australia. He didn’t specifically address monetary policy. RBA Governor Glenn Stevens held the benchmark rate at 4.75 percent this month for a sixth straight meeting. The Aussie gained 0.2 percent to A$1.3524 per euro, from A$1.3548 yesterday. It fell 0.3 percent to $1.0491, from $1.0523. To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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