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Euro Reaches 13-Month Low
Oct. 6 (Bloomberg) -- The euro slid to a 13-month low against the dollar as European governments rushed to support financial institutions in the region hit by the widening global credit crisis. The 15-nation currency also fell to the lowest in more than two years versus the yen as German Chancellor Angela Merkel said the government will guarantee personal bank deposits to shore up confidence in the banking system. Germany, the euro region's largest economy, will also join with banks and insurers to bail- out property lender Hypo Real Estate Holding AG, while Belgium announced a deal to rescue Fortis, the largest Belgian financial-services firm after an earlier rescue failed.``Everything coming out has been fairly euro-negative,'' said Alex Sinton, a senior currency dealer at ANZ National Bank Ltd. in Auckland. ``The euro zone is the second domino of the globe to be falling over after the U.S.'' The euro declined to $1.3670 at 8:15 a.m. in Tokyo from $1.3772 late in New York on Oct. 3. It earlier reached 1.3617, the lowest since Sept. 5, 2007. The euro fell to 142.65 yen, the weakest since May 22, 2006, and traded at 143.29 yen from 145.11 yen. The dollar bought 104.88 yen from 105.32 yen. The German government and the country's banks and insurers agreed on a 50 billion euro ($68 billion) rescue package for commercial property lender Hypo Real Estate Holding AG after an earlier bailout faltered. BNP Paribas SA, France's biggest bank, will take control of Fortis's units in Belgium after a government rescue of the Brussels and Amsterdam-based company failed. BNP Paribas will buy 75 percent of Fortis Bank Belgium from the government for 8.25 billion euros ($11.3 billion) in stock, and purchase the company's Belgian insurance operations, Prime Minister Yves Leterme told reporters. Japan's currency was the best-performer in September and the only currency to appreciate against the dollar as credit market collapse that drove Lehman Brothers Holdings Inc. into bankruptcy and sent bank borrowing costs in Europe to record highs makes the yen unbeatable. Deutsche Bank AG, the biggest trader of foreign exchange, says the yen will rise 5 percent in coming months. New York- based Morgan Stanley is telling clients to buy the currency versus the euro and pound. Futures traders increased their bets that the yen will gain against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. Posted by: Steve White 2008-10-06 |
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