Euro Falls, Set for Weekly Loss, as Trichet May Signal Rate Cut

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The euro fell, set for the biggest weekly decline in a month against the dollar, on speculation European Central Bank President Jean-Claude Trichet will signal in a speech today that he may cut interest rates to spur growth.

The 16-nation currency headed for its seventh weekly loss in eight weeks after ECB council member Erkki Liikanen said the bank has not used all the tools at its disposal to revive the region’s flagging economy. South Korea’s won weakened beyond 1,500 per dollar for the first time in three months on concern falling exports will worsen a shortage of dollars and strain the ability of local banks to repay debt.

“The outlook for a narrowing interest-rate differential is negative for the euro,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management Ltd., a unit of France’s third-largest bank. “The euro may fall to below $1.25 in the near future.”

Europe’s currency dropped to $1.2601 as of 8:10 a.m. in London from $1.2674 late in New York yesterday. It has fallen 2 percent this week, the biggest decline since the five days to Jan. 23. The euro touched $1.2513 on Feb. 18, the lowest since Nov. 21. It weakened to 118.20 yen from 119.37 yesterday.

The yen traded at 93.80 per dollar from 94.20 in New York yesterday. The won slumped 1.7 percent to 1,506 per dollar at the close of trading in Seoul, completing this year’s biggest weekly drop of 6.8 percent, according to Seoul Money Brokerage Services Ltd. It touched 1,515, the weakest since Nov. 24.

From Bloomberg News.