The euro remained weaker against the yen after declining for the last four days. This comes before a report forecast showing that the euro-zone economy declined in the fourth quarter is released later today. Investors are taking this as an additional sign of the effects of the debt crisis in the region.
The demand for the dollar increased after the Federal Reserve Bank of Dallas President Richard Fisher indicated that he is opposed to additional bond purchases. If there are no additional bond purchases, the world’s reserve currency will be lowered significantly. The Australian dollar declined to its week’s lowest prior to central bank meeting today to decide on the interest rates.
According to Marito Ueda, buying euro makes no sense at this time since the ECB is caught up in efforts to tackle the region’s sovereign debt crisis. Ueda, who is the Senior Managing Director in Tokyo, further added that the ECB has no room left to boost the economy through its monetary policy.
The euro dropped 0.2 percent to sell at 107.57 yen from 107.79 yen registered at the close of trading in New York yesterday. The 17-nation currency was a bit changed at $1.3208, while the dollar dropped to 81.43 yen from yesterday’s close of 81.56 yen.
The Gross Domestic Product in the euro area is estimated to have fallen by 0.3 percent in the fourth quarter of 2011 from the figure recorded in the third quarter. This is a figure that has been given by some economists in the region ahead of the release of the official GDP report by the European Union. If this drop is actually true, then this would be the first drop since the second quarter of 2009 and would confirm the Feb. 15 estimate.
Economic analysts are also estimating that the European Central Bank will keep the interest rate at 1 percent in its efforts to spur growth in the region. ECB officials meet on March 8th to deliberate on this issue and Greek debt swap deal will be completed on the same day.
