Tags: Euro | Drops | ECB | Loans

Euro Drops to 10-Year Low Against Yen as ECB Loans Fuel Debt Concern

Wednesday, 28 Dec 2011 12:00 AM

 

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The euro dropped against the yen to the lowest level since 2001 as the European Central Bank’s balance sheet soared to a record after it lent regional banks more money last week to keep credit flowing.

The 17-nation currency fell against the dollar to the least since January as concern increased that the region’s sovereign- debt crisis will curb growth, even as rates fell at an Italian bill sale. The dollar gained as stocks dropped, boosting demand for haven assets. The yen strengthened after a U.S. Treasury report criticized Japan for intervening in the currency market and as economic reports signaled slowing economic growth.

“We’re still so far from being out of the woods that even on a day of being positive, people decided that the euro should continue to fall,” said David Mann, regional head of research for the Americas at Standard Chartered Plc. in New York. “It’s quite a sharp rise in the ECB balance sheet. It’s concern about monetization already on the way in Europe.”

The euro dropped 0.8 percent to 100.94 yen at 2:25 p.m. in New York. It touched 100.73 yen, the lowest level since 2001. The shared currency fell 1 percent to $1.2946, touching $1.2912, the least since Jan. 11. The dollar rose 0.1 percent to 77.96 yen.

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