Euro nears 4-year low vs dollar after China report

By Kaori Kaneko

TOKYO (BestGrowthStock) – The euro approached a four-year low against the dollar and an 8-1/2-year low against the yen on Thursday as a sell-off led by nagging worries about Europe’s debt trouble showed no signs of abating.

The euro was also dragged down after the Financial Times reported on Wednesday that China is reviewing its euro zone debt holdings because of growing concerns about gaping deficits in countries including Greece and Portugal.

“The report on China raises the prospect that other emerging nations may follow suit. The impact is large as market attention on China is high at the moment,” said a trader at a Japanese bank.

“The market is vulnerable to bad factors now and the euro seems to have fallen into a negative spiral,” he said.

The euro inched down 0.1 percent from late U.S. trade to $1.2167, just above a four-year low of $1.2143 hit on trading platform EBS last week.

The euro has lost more than 8 percent against the dollar so far this month and is heading for its biggest monthly fall since October 2008.

There was market talk of option barriers at $1.2100 and then at $1.2000.

The euro was little moved on the day at 109.46 yen, hovering close to an 8-1/2-year low of 108.83 yen hit on EBS earlier this week.

Worries about tighter dollar funding, with costs for banks to borrow dollars in the interbank market posting fresh 10-month highs on Wednesday, are prompting investors to shift to the relative safety of the greenback and away from riskier assets and currencies, traders said.

U.S. two-year swap spreads, a key gauge of financial system stress, ended on Wednesday around 48 basis points, having widened to one-year highs on Tuesday.

The dollar was steady at 89.85 yen.

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(Editing by Michael Watson)

Euro nears 4-year low vs dollar after China report