The euro fell toward a one-week low versus the dollar as European Central Bank policy makers prepare to meet tomorrow amid political and banking turmoil that threatens to deepen the debt crisis gripping the currency bloc. The 17-nation euro slid against most of its 16 major peers as Spanish Prime Minister Mariano Rajoy faced opposition calls to resign amid contested reports of corruption in his party. Italy’s Banca Monte dei Paschi di Siena SpA may disclose today the size of losses it hid in 2008 and 2009 using derivatives. The yen weakened to 94 per dollar for the first time since May 2010 on speculation Japan’s government will select a new central bank chief committed to boosting monetary easing. “The banking scandal in Italy, plus the Italian elections and the Spanish scandal and economic issues, all mean that there are still risks for the euro that will cap the upside,� said Jane Foley, a senior currency strategist at Rabobank International in London. The euro fell 0.4 percent to $1.3535 at 10:09 a.m. London time, after declining to $1.3459 yesterday, the lowest since Jan. 29. It slipped 0.3 percent to 126.84 yen after climbing to 127.71, the strongest since April 2010. The yen slid 0.1 percent to 93.71 per dollar, after touching 94.06, the weakest level since May 5, 2010. Monte Paschi, the world’s oldest lender, said on Jan. 17 it may be forced to restate earnings after Bloomberg News reported that it used derivatives to obscure losses. Accounting irregularities also led to a criminal investigation targeting former management. The bank’s board is meeting in Siena today to discuss the impact on its balance sheet. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.

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