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Euro slides against dollar, yen - Yahoo! News
LONDON (AFP) - The euro came under heavy pressure against the dollar and yen Thursday on increasing speculation that the eurozone will not be able to escape a recession later this year.
Dealers said the euro had been hard hit by Wednesday's sharp downgrade in 2008 eurozone growth estimates to 1.3 percent from the previously given 1.7 percent from the European Commission.
They said the dollar has maintained its safe haven status and in times of such financial market turmoil as now, investors were seeking safety for their money.
Later Thursday, the euro managed to recover some ground after more losses on Wall Street stoked persistent concerns about the US economic outlook and banking system.
In late London trade, the euro was at 1.3943 dollars, coming off an early low of 1.3882 dollars -- its weakest level since September 18, 2007.
The euro had traded at 1.3976 dollars in New York late on Wednesday.
The single currency also tumbled against the yen, hitting its lowest point since September 2006 on heightened concerns about the European economy.
The euro was quoted at 148.43 yen in late London deals, just off the two-year trough of 148.38 yen seen earlier but still well down from 150.67 yen on Wednesday.
The dollar meanwhile fell to 106.57 yen from 107.81 yen.
The single European currency was sold off after the European Commission warned Wednesday that the 15-member eurozone was teetering on the brink of recession.
"As Europe and even emerging economies struggle from the fallout (from the US subprime home loan) crisis, the (view) is that the US is doing relatively well compared with the rest of the world," said Sumitomo Trust Bank chief foreign exchange strategist Saburo Matsumoto.
"The dollar appears sandwiched between conflicting forces," said Stuart Bennett at Calyon, the French investment bank.
"On the one hand, financial market uncertainty and equity market softness should not favour the dollar ... On the other hand, clear signs that the European slump is outpacing that in the US still favour the dollar.
"Hence, the exchange rate looks set to hover around this 1.40 (dollars) level until it becomes clear which of the factors is exerting the most pressure," Bennett said.
In late London trade Thursday, the euro changed hands at 1.3943 dollars against 1.3976 late Wednesday, at 148.43 yen (150.67), 0.7957 pounds (0.7986) and 1.5885 Swiss francs (1.5908).
The dollar stood at 106.57 yen (107.81) and 1.1406 Swiss francs (1.1382).
The pound was at 1.7505 dollars (1.7499).
On the London Bullion Market, the price of gold fell to 740.75 dollars per ounce from 775.75 dollars late on Wednesday.
11th September 2008
