Euro Falls to 14-Month Low


The euro had its biggest one-day drop against the yen since its debut in 1999 as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks while stopping short of coordinated action.

The 15-nation currency declined to a 14-month low against the dollar and the weakest in 2 1/2 years versus the yen after leaders meeting at the weekend avoided announcing any plan that would mirror the U.S.'s $700 billion bailout.

The euro
fell to 139.80 yen, the weakest since March 2006, before trading at 140.47 as of 7:36 a.m. in New York, from 145.11 on Oct. 3. The euro declined to $1.3605, from $1.3772. It earlier reached $1.3543, the lowest since Aug. 23, 2007. The dollar bought 103.31 yen, from 105.32, after earlier sliding below 103 for the first time in four months. Against the pound, the euro fell to 77.02 pence, the lowest since March 14. It also declined to 1.5379 Swiss francs, the weakest in more than six months.

The pound
fell against the dollar amid speculation the Bank of England will cut interest rates this week to bolster an economy that may be in a recession. The U.K. currency declined to $1.765 by 8:30 a.m. in New York, from $1.7714 at the end of last week, when it dropped 4 percent, the most since October 1992.

Canada's currency
weakened to the lowest since May 2007 as crude oil fell below $90 a barrel for the first time since February. The Canadian dollar dropped as much as 0.9 percent to C$1.0924 per U.S. dollar, from C$1.0827 on Oct. 3, the lowest since May 18, 2007, when it touched C$1.1001. It last traded at C$1.0847 at 7:50 a.m. in Toronto.

Japan's currency was the best performer in September and the only currency to appreciate against the dollar as a credit- market collapse drove Lehman Brothers Holdings Inc. into bankruptcy and sent borrowing costs in Europe to record highs. The currency rose to 103.88 per dollar as of 12:46 p.m. in Tokyo from 105.32 late in New York on Oct. 3. Japan's currency also climbed 3.3 percent to 67.56 per New Zealand dollar and gained 4.3 percent to 78.10 against the Australian dollar.

After seven years of providing the cheapest source of funds for investors buying higher-yielding New Zealand dollars, Australian dollars and Brazil reais, the yen is appreciating as $587 billion of subprime mortgage-related losses force banks to restrict credit. It strengthened 4.4 percent on a trade-weighted basis in September, according to the Bank of Japan's effective exchange rate, the most since August 2007.

The Australian dolla
r dropped below 75 U.S. cents for the first time since October 2006 and New Zealand's currency also declined as a deepening global credit crisis damped demand for higher-yielding assets. The Australian dollar fell 3.2 percent to 74.92 U.S. cents as of 4:34 p.m. in Sydney from late last week in New York. New Zealand's dollar weakened 2.1 percent to 64.80 U.S. cents from 66.18 cents in New York last week.

India's rupee weakened to the lowest level since February 2003 as losses in local stocks prompted global funds to reduce holdings. The rupee fell 1.5% to 47.81 against the dollar at the 5 p.m. close in Mumbai, the lowest close since Feb. 14, 2003, according to data compiled by Bloomberg.

Chinese yuan was little changed on speculation China is favoring a slower pace of appreciation to support economic growth amid turmoil in global financial markets. The currency was little changed at 6.8503 a dollar in Shanghai as of 11:47 a.m., according to the China Foreign Exchange Trade System.

The ruble was little changed at 30.4013 against the basket by 2:18 p.m. in Moscow, close to the 30.40 level analysts at banks including UniCredit SpA, Credit Suisse Group, ING Bank NV and BNP Paribas SA. say is the weaker end of the central bank's trading band.


TradingEconomics.com, Bloomberg.com
10/6/2008 5:31:48 AM