Euro weak on Greek political turmoil
TOKYO – The euro remained weak against the dollar in Asian trade on Wednesday as investors worried about political uncertainty in debt-ridden Greece and its wider impact across the 17-nation eurozone.
The euro bought $1.2725 in Tokyo morning trade, compared with $1.2728 in New York late Tuesday, and treading its lowest levels in about four months.
The common currency fetched 102.28 yen against 102.12 yen, while the dollar was at 80.38 yen, slightly up from 80.23 yen in US trade.
“There is a pervading sense of unease in financial markets, a disquieting feeling of having been in something like this position before and wondering if it might turn out the same,” National Australia Bank said in a note.
“In Greece, there are increasing outflows from its own banking sector and broader discussion of contagion effects,” it said.
Greece must hold fresh elections after talks on forming a new government broke up without agreement Tuesday, prolonging a tortuous crisis which could ultimately see Athens exit the troubled eurozone.
“The concern now is regarding contagion. It’s not Greece per se that is the problem, but the credibility of the euro as a currency,” the bank said.
Spain was already feeling pressure with yields on its 10-year bonds rising, it added, amid a credit rating downgrade on two dozen Italian banks and weak economic data out of Europe.
Masafumi Yamamoto, chief strategist at Barclays Bank in Tokyo, said the dollar may rise above 81 yen if minutes of the US Federal Reserve policy-making body due later Wednesday suggest the Fed will not take additional easing steps.
“It’s worth paying attention to whether the number of the Fed board members supporting additional easing will decrease,” he told Dow Jones Newswires.
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