BLBG:Euro Heads for Monthly Loss Versus Dollar on Concern Crisis Will Spread
The euro headed for a monthly loss against the dollar on concern European measures to counter the debt crisis will fail to halt contagion and as Standard & Poor’s cut the credit ratings of some of the world’s largest banks.
The 17-nation currency earlier approached an eight-week low versus the greenback after euro-area finance ministers meeting yesterday conceded efforts to expand their bailout fund missed the target and said they would seek a greater role for the International Monetary Fund. The euro erased losses after China said it will cut its reserve requirement ratio for banks.
“I’m not of the view that any of the decisions being taken by the finance ministers are changing anything,” said Jeremy Hale, head of macro strategy at Citigroup Inc. in London. “We’re still waiting for some definitive action. Markets are still very nervous about a breakup of the euro-region.”
The euro was little changed at $1.3324 at 6:16 a.m. in New York after dropping to $1.3212 on Nov. 25, the weakest level since Oct. 4. The shared currency was also little changed at 103.96 yen. The dollar gained 0.1 percent to 78.03 yen.
The shared currency has declined 3.9 percent versus the dollar and 4 percent against the yen this month as speculation the sovereign debt crisis will infect the larger nations damped demand for the region’s assets.
Euro-area finance ministers meeting in Brussels yesterday agreed to work on boosting the resources of the IMF so it can “cooperate more closely” with the European Financial Stability Facility, Luxembourg’s Jean-Claude Juncker told reporters.
After a series of stop-gap accords failed to protect Italy and Spain from surging bond yields, Europe is under growing pressure from U.S. leaders and international financial markets to find ways to boost the EFSF’s effectiveness.
S&P lowered the ratings of Goldman Sachs Group Inc. and Bank of America Corp. to A- from A, as part of criteria changes started three years ago. The company also reduced the rankings of UBS AG, Morgan Stanley, Citigroup, Bank of America’s Merrill Lynch unit and JPMorgan Chase & Co.
To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
