Euro Falls Most Since 1999

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

The 15-nation currency fell below $1.35 for the first time since August 2007 after European authorities avoided announcing any plan comparable to the $700 billion U.S. bailout.

The euro dropped 5.4 percent to 137.22 yen at 4:04 p.m. in New York, from 145.11 on Oct. 3. It touched 135.05, the weakest since September 2005. The euro fell 1.9 percent to $1.3517 from $1.3772. It earlier reached $1.3456, the lowest since August 2007, when the credit market crisis started to gain momentum. The dollar fell 3.5 percent to 101.62 yen, from 105.32, in its biggest drop since October 1998.

The greenback
rose against the euro today on a surge in demand for U.S. currency funding as banks remained reluctant to lend to each other. The dollar gained 5.8 percent last week in its biggest rally since the euro's inception.

The yen
rose the most against the dollar in a decade as global stocks plunged, damping carry trades. Implied volatility on one-month euro-dollar options rose to a record high.

The yen rose as much as 13.7 percent to 70.32 per Australian dollar, the strongest since March 2003, and 11.6 percent to 45.58 versus the real on speculation a drop below 10,000 in the Dow Jones Industrial Average will discourage trades in which investors get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 7 percent in Australia and 13.75 percent in Brazil.

Canada's currency weakened to the lowest since May 2007 after the U.S. dollar strengthened against most major currencies amid a widening credit crisis and crude dropped below $90 a barrel for the first time since February. The Canadian dollar dropped 2 percent to C$1.1046 per U.S. dollar at 2:48 p.m. in Toronto, from C$1.0827 on Oct. 3. Earlier it touched C$1.1089, the lowest since May 14, 2007, when it touched C$1.1128.

Brazil's real,
South Africa's rand and Mexico's peso tumbled on concern a global economic slowdown will cut demand for emerging-market assets. The real dropped as much as 7.8 percent to 2.2037 per dollar, the lowest level since September 2006. The rand fell 5.7 percent to 8.9767, the weakest since January 2003. The peso slid 6.6 percent to 11.9992 against the dollar, the weakest since 1993, when a new peso equivalent to 1,000 old pesos was introduced.

The ruble
fell to its weakest level since March 2007 against the dollar as the credit crisis spread to Europe and the price of oil, Russia's biggest export earner, dropped for a fourth day. The currency fell as much as 1.2 percent against the dollar today to 26.2950, the lowest since March 13 last year. It was at 26.2538 by 7:37 p.m. in Moscow, from 25.9801 on Oct. 3

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.,
10/6/2008 3:08:02 PM