Euro hits 1-year low on Greece, Portugal downgrade

By Masayuki Kitano

TOKYO (BestGrowthStock) – The euro hit a one-year low against the dollar on Wednesday and some traders saw scope for a further drop in the near term, after downgrades of Greece and Portugal’s credit ratings raised fears the euro zone’s debt problems were spreading.

The euro tumbled nearly 2 percent on Tuesday for its biggest one-day percentage loss in about a year, after ratings agency Standard and Poor’s slashed Greek debt to junk status and downgraded Portugal.

The euro extended its decline in early Asian trading on Wednesday and slumped to a one-year low of $1.3144 on trading platform EBS.

“In terms of trading ranges, when taking into account the fact that the euro has hit new lows, a fall to below $1.3000 is very much a possibility,” said a trader for a European bank, adding that such a decline could occur in the near term.

After trimming early losses, the euro stood at $1.3176, little changed from late U.S. trading on Tuesday.

Against the yen, the euro held steady at 122.83 yen, after sliding more than 2.5 percent on Tuesday.

The dollar edged down 0.1 percent to 93.19 yen.

The downgrades of Greek and Portuguese debt helped trigger a slide in U.S. and European shares and sent the yen broadly higher on Tuesday.

“I think what happened was that some short-term positions were liquidated. I do not get the sense that there has been a shift in the broader trend,” said a trader for a Japanese bank.

“What has become clear is that it is probably better to sell the euro at levels above 125 yen and the dollar at levels near 94 yen,” he said.

In the near term the euro may attract some buying from players such as Japanese importers at levels below 122 yen, the Japanese bank trader said.

Investing Research

(Editing by Chris Gallagher)

Euro hits 1-year low on Greece, Portugal downgrade