Euro is the lowest it has been in three months against the weak dollar

The euro fell this week in three months against the weak dollar, fears more banks on the euro issue of the slowing down of the Eastern Europe.

Rating agency Moody’s said the Austrian, Swedish and other banks with branches in Eastern Europe danger that the downturn in the economies of the crisis region.

Euro, banks have the largest exhibition in Central and Eastern Europe, with the passive 1500bn $, about 90 percent of the total amount of the exhibition of foreign banks in the region.

Central and Eastern Europe, the European currencies have been under intense pressure from the crisis in international credit markets has raised concerns about the ability of the region to finance the current account deficits and the slowing of global growth has increased concerns about the health of its economy dependent on exports .

The Polish zloty is at a period of five years less than 4930 zloty against the euro this week, the Czech crown reached a low point three years Kc29.677 against the single currency and the Hungarian forint fell to its lowest Ft309.85.

To add to this pressure on the euro were the signs of growing tension between the Member States, with the price for ensuring the public debt to the countries of the lowest in the region such as Ireland and Greece to a sharp increase in the credit default swaps, in compared to at the base, such as Germany and France.

Feeling in the single currency has a lift Thursday, that Germany has indicated that he prepared for the protection of the euro zone, if one of its Member States is in serious difficulty that we can not refinance its debt.

This position was questioned Friday Juergen Stark, member of the Executive Governing Council reaffirmed that the EU countries are not entitled to the partner countries.

“The ban by the EU and its Member States to ensure that its partners in the liabilities is an important basis for the functioning of monetary union,” he said.

David Simmonds, Royal Bank of Scotland, said the “ugly stick currency”, organized by the U.S. dollar in 2007 and the pound in 2008, the changeover to the euro in 2009.

He said that the euro was built with a crack in the foundation stone, so there was a currency and monetary policy, but many fiscal policies.

“Everyone knew that the crack was there,” said Simmonds. “It is ignorable for the first 10 years from the sun, low volatility, the weather around the world. It is not now ignore the tax and finance.”

During the week, the euro has increased by 1.8 percent to $ 1.2623 against the dollar lost 1.3 percent to £ 0.8830 against the pound and the facilitation of 0.4 percent in SFr1.4885 against the Swiss franc.

The euro was up 0.4 per cent to Y118.95 against the yen than to a sharp decline in Japanese growth in the fourth quarter to the injustice of the Japanese currency will shelter.

The yen has a bottom six weeks against the dollar by 2.5 per cent to Y94.19 on the week and losing 1.8 percent to Y134.69 compared to the book.

In addition, the dollar is in a good performance, renewed weakness in the stock markets port stimulates demand for the U.S. currency.

In the week the dollar has increased by 0.6 percent to $ 1.4295 against the book, has increased by 2.3 percent to $ 0.6415 against the Australian dollar and increased by 1, 5 percent SFr1.1793 against the Swiss franc.

Europe is in the eye of the credit tornado

The currencies in Central and Eastern Europe have done, but it could be worse to come, that the banks in the euro zone to win their horns.

Most of the large current account deficits in the world of emerging markets in Central and Eastern Europe and the region has a high degree of dependence on the export. It is in the eye of the global economic storm.

The Hungarian forint fell to its lowest level against the euro this month Ft304.25, and it is 12 percent compared to the single currency this year.

Poland zloty fell to a period of five years against the euro and the weak is a decrease of 11 percent this year. The Czech crown is a lowest level in three years against the euro, a decrease of 7 percent since the beginning of the year.

The countries of the region are characterized as from the emerging countries, the weakest in the global crisis. Will they deal with increasing problems of financing of current accounts at large and to reimburse the foreign debt, the analysts say.

Poland, the Czech Republic and Hungary have foreign debt bills this year, about 100 billion U.S. dollars, according to ING Financial Markets, the battle for them to reimburse, as access to the markets of the still limited resources.

Hungary was forced to ask for help, the International Monetary Fund to cover the refunds. Analysts say it is inconceivable that Poland and the Czech Republic finds itself in the same situation.

Gerard Lyons of Standard Chartered has written: “The dependence of the values is alarming when one considers the global impact of the crisis in international credit markets. With the collapse of exports and foreign direct investment plans on hold, the net result is a major rotation of the Capital flows to emerging economies. ”
According to the Institute for International Finance, net loans of commercial banks in the emerging markets is of a flood of 410bn $ 2007 $ 67bn in 2008, and one sees the transition to a throughput of $ 61bn this year. “Even the May be too optimistic,” says Lyons. “The extent of the problem can be very vulnerable Eastern Europe.”

Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, said: “Eastern Europe is a region which are in the greatest difficulties. I expect the currency in most of these countries to cope with new lows.

“It is not possible that the Russian ruble fell. This affects the Eastern European currencies. In contrast to Russia, these countries do not have a large foreign exchange reserves set to”.

Hans Redeker at BNP Paribas is a clear similarity between the economic and financial conditions in emerging countries in Europe and the Asian economies before the crisis of 1998. The Asia crisis was accompanied by a rapid growth of lending to the private sector, with a large proportion of loans in foreign currencies.

East Asian savings also have the shortcomings of the current large, especially by the private sector. These deficits were accompanied by a strong inflow of the debt that suddenly reversed after the crisis.

Before the credit crisis, the need for external financial resources heavily in Eastern Europe have, in most cases in the form of direct investment in the euro area.

Euro, banks have the largest exhibition in Central and Eastern Europe, with the passive 1500bn $, about 90 percent of the total amount of the exhibition of foreign banks in the region.

Analysts warn that the banks in the euro area, particularly those who had state aid, rarely go to the importance of debt that reached in the coming months.

Credit Suisse believes that $ 9bn debt in foreign currency is in Hungary in the next three months, while in Poland, the value of $ 23bn.

The reaction of central banks in the region of the slowdown, the situation.

Ulrich Leucthmann Commerz Bank said the central banks have interest rates at a pace in a weak effort to the local economy, without that the external value of its currency. Hungary has the IMF for help in October, but is not obligated to give that advice to slow the rate.

Poland, the restrictive fiscal policy in an effort to reduce the deficit of the households in the limits set by the Maastricht criteria for entry into the euro zone.

Mr. Leucthmann says the only solution for the central banks in the region against further interest rate cuts and to declare that the market they are concerned about the external value of its currency.

“At this stage it is not safe, but even if this measure was placed on the sale of the Hungarian forint, Polish zloty and Czech koruna,” he says

Euribor 3 months success rate of 22 months with low

Euribor euro banknotes went to banks on Wednesday with the key of three months was transferred to another 22 months low. The three-month Euribor interest rates, which are traditionally seen as the most important guarantee for the bank to bank loan market, the euro fell to 3743 percent 3786 percent, the lowest rate since mid-January 2007. This corresponds to one week fell to 3038 per cent per cent in 3093, a never since the beginning of October 2006. The sentence of six months rose to 14 years summit in early October, is limited to 3787 percent 3828 percent, the lowest rate since mid-December 2006. European Central Bank, interest rates and lending rule changes have helped the bank to bank reduced the historic, but the differences between the official and the level of interbank lending still tight and the trading volumes are low tension on the money to refuse to go. The ECB is the interest rate for one week by the banks is currently 3.25 percent after two cuts by 50 basis points from October. He also has to scrap limits on the banks can borrow at the auction and the reduction of the quality of the collateral it accepts that it is better for banks to borrow cash municipality. EURIBOR will be updated daily by the Banking Federation of the European Union (FBE) shortly after 1000 GMT. Three months a reference rate for very short-term loans in Europe, and one week, shows the proportion of banks in a very short time the conditions for funding.

Serbia cbank acts as dinar hits record low of Serbia, the central bank intervened in the foreign exchange markets again on Wednesday as weakness in the dinar currency by 1 percent against the euro to hit a new era against the currency, dealers said.

“So far we have seen at least five cycles of intervention,” says one trader. “The result of their work was bad.”

Upon completion of psychological importance in the framework of the Euro to 90, on Tuesday, the dinar has its fall in the trade as 92351, Wednesday, before returning to win dinar against the euro.

“We have no exact figures on the intervention, but we believe that so far has been 30 to 50 million euros,” says another broker.

The currency in the Western Balkans heavily on exports to foreign countries, but with a large deficit, and by 22 percent since their peak in August.

Although the Governor of the Central Bank last week said he expects that the dinar strengthened in the future, some experts believe that the stability come around 100 dinars to the euro.

“In the period of political instability before the elections in May, the monetary policy was appropriate, the value of the dinar to imports,” said Vladimr Gligorov, an economist at the Institute for International Economic Relations of Vienna.

“Well, the dinar is 90 and it will be of 100, is the price he must pay to the past, the monetary policy.”

The Serbian central bank intervened regularly in recent months and provided 646 million euros since the beginning of October on Tuesday in an effort to ensure the currency and the maintenance of liquidity.

Euro falls due to forecast average growth estimates

The euro fell sharply against the dollar and the yen Monday, after the European Commission reduced its growth forecast for 2009, and Spain was the second largest economy in Western Europe, its credit rating declines.

The single currency has fallen 1.4% against the dollar to 1.6% $ 1.3116 and fell against the Japanese yen at Y118.78.

The deterioration of the Spanish sovereign rating by Standard & Poor’s on the market shakes on fiscal conditions in the euro zone, after the credit downgrading of Greece last week and warnings of Portugal and Irlande’s Ratings.

Stuart Bennett at Calyon, said: “Spain is less Down is a signal, and we saw the reaction to Kneejerk exchange markets, for the very poor growth forecasts from the European Commission, and thin volume of trade on the market. ”

The euro was penalized in Brussels cut its growth forecast for the euro zone in 2009 to less than 1.9%, the first negative growth since the single currency was put into service in 2002, according to the Organization for Economic Cooperation and economic development.

Despite the bad news for the euro, some currencies less attractive to traders. Against the pound sterling, the euro added 0.8% to £ 0.9057, amid broad Sterling weakness after the last bank bail-out. The pound fell 2.4% against the dollar at $ 1.4479 and was 3% lower against the yen of Y130.84.

The euro also strengthened against their colleagues from Eastern Europe, as traders avoid emerging markets, in the middle of the way of risk aversion.

The euro has gained 0.6% against the Czech koruna, Kc27.646 and increased by 0.9% compared to the Polish zloty to 4.3130zlotys.

The Hungarian forint pressure Hungary Central Bank has cut interest rates by 50 basis points to 9.5%.

The forint was 2.2% on a low against the euro on Ft285.84, and fell 4% against the dollar to Ft217.41.

Lars Christensen at Danske Bank, said: “The news of weakness of the forint is likely to arouse the concerns of the Hungarian Central Bank, but it should continue for monetary policy in coming months because inflation the economy slows and burglaries.

The dollar was slightly weaker against the yen, 0.6 percent over Y90.42, but the psychological important Y90 for a second session of the optimism regarding the future management of the proposal has helped Obama green board.

The dollar by 1.3 percent against the Swiss franc at SFr1.2504, was 0.6% higher against the Canadian dollar to C $ 1.2503 and added 0.9% against the rand South Africa about R10.1230.

The fear of a weaker euro results

The euro fell to a five-week-low against the dollar this week as fears over the health of the economy on the periphery of the euro zone, after European Central Bank interest rates.

The euro under pressure earlier this week by Standard & Poor’s, the rating agency, Greece assessment of declining government bonds, where the erosion of competitiveness and a growing fiscal deficit. These warnings, followed by rating agency, regarding the outlook for the rest of the euro area underdeveloped.

The reports fueled speculation of abandoning the euro may be an option for some members of the currency bloc.

“Emu resolution clearly remains a strong theme of trade and a number of investors still requires that at least some countries are trying to return to their old currencies,” said Thomas Stolper of Goldman Sachs activity.

The euro has also been recognized by decision of the ECB to reduce interest rates by 50 basis points to 2% after its policy meeting on Thursday.

Although Jean-Claude Trichet, ECB president appeared a further reduction in the February meeting, he said that to further reduce the Central Bank meeting in March.

Some analysts to lower rates could be said, as early as next month. “During the next meeting is only three weeks ahead of economic data could once again the question of the attitude of the ECB’s decision in February cut,” said Hans Redeker of BNP Paribas. “It will be pressure on the euro.”

During the week, the euro fell to 1.6 per cent of $ 1.3219 against the dollar and fell by 1.2% against the yen Y119.79.

The euro against the pound extended from 0.8 percent to £ 0.8919, sterling was as yet some of its profits from the record of the previous week.

The pound lost 2.3% to $ 1.4820 against the U.S. dollar was Y134.22 and 2% against the yen.

The book has been strengthened on Friday on reports that the British government was close to the plans to support financial sector troubled country, the cost of bank refinancing, a relaxation of rules on the balance sheet force guarantees and toxic assets on the balance sheets of banks.

The dollar and the yen benefits greatly from the past week as concerns about the impact of the credit crisis on the financial sector as the dominant driver of currency moves.

Weak global stock markets weighed on risk management of appetite and demand for both currencies Safe Haven.

News that the U.S. government was on bail of Bank of America has made some facilitation for investors on Friday, sending the dollar and the yen weak.

During the week, the dollar rose 0.8 percent SFr1.1214 against the Swiss franc, rose by 3.1% against the Swedish krona SKr8.19 and gained 4.7% to $ 0.6701 against the Australian dollar. The yen eased only 0.3% over Y90.59 against the dollar this week.

New Zealand Dollar suffered by S & P warned it might downgrade the debt in foreign currency valuation. It reduced the outlook for New Zealand’s Rating to negative from stable, with an increase in the deficit and the deteriorating fiscal position.

The Kiwi has been sold in the news, after 7.6% to $ 0.5450 dollar on the week and from 7.3% to Y49.34 yen.

Euro dives on  IMF rumors 
The euro has again profits, the small increase, on Wednesday amid concerns on the situation of public finances of the economy on the periphery of the euro area.

Rating agency Standard & Poor’s public debt in Greece, citing the erosion of competitiveness and a growing fiscal deficit.

These reports, that Ireland has been to seek the assistance of the International Monetary Fund, if the deterioration of the economic situation deteriorated.

The Irish authorities were quick to deny the rights of the reports but analysts said investors worried because it was the first time, proposals were made that the IMF intervention would be needed in the euro area.

The reports on the cost of ammunition, as speculation of a Euro-exit may be an option for some members of the group.

In fact, Geoffrey Yu at UBS, which reports are another blow for the monetary union.

He said, within the euro area has been increasing over the past year and the situation was not for the immediate future.

“We believe that further assessments of the measures is possible and represents a major threat to confidence in the euro, given that several important countries of debate and budget deficits,” said Yu.

Immersion in the euro area, industrial production and the prospect of a rate cut by the European Central Bank after the meeting on Thursday also held policy of the euro in the failures.

Late in New York, the euro fell to 0.2 per cent of $ 1.3160 against the U.S. dollar, 0.6% to Y117.12 against the yen and lost 0.7% to 0.9028 £ against the pound sterling.

Sterling also claimed that the British government announced up to £ 21bn of bank loans for small and medium enterprises.

“This could Sterling, that the lack of support from lending to businesses has a major problem in the UK, banks prefer to credit standards,” said Hans Redeker of BNP Paribas.

The pound rose 0.6% to $ 1.4575 against the U.S. dollar.

In the meantime, a sharp drop in U.S. retail increased the yen and the dollar weakened as a share of the market after the data release.

“The dollar reacted positively to the retail sales worse than expected report of increased risk aversion causes investors, for the traditional Safe Haven currencies the dollar and the yen,” said Michael Woolfolk of the Bank of New York Mellon.

The dollar rose 1.2% to CHF 1.2392 against the Canadian dollar and 0.5 per cent to $ 0.6612 against the Australian dollar.

The yen rose 0.4 percent to Y88.99 against the U.S. dollar, while 0.2 per cent rise against the Y129.70 books.

Greece euro undermines Downgrade

The euro has again profits, the small increase, on Wednesday amid concerns on the situation of public finances of the economy on the periphery of the euro area.

Rating agency Standard & Poor’s public debt in Greece, citing the erosion of competitiveness and a growing fiscal deficit.

These reports, that Ireland has been to seek assistance from International Monetary Fund, if the deterioration of the economy has deteriorated.

The Irish authorities has been swift, as receivables. But, said one analyst reports worried investors because it was the first time, proposals were made that the IMF intervention would be needed in the euro area.

The reports on the cost of ammunition, as speculation of a Euro-exit may be an option for some members of the currency bloc.

In fact, Geoffrey Yu at UBS, said the report was another blow to monetary union.

He said, within the euro area has been increasing over the past year and the situation was not for the immediate future.

“We believe that further assessments of the measures is possible and represents a major threat to confidence in the euro, given that several important countries of debate and budget deficits,” said Yu.

“We used to see the euro under pressure to be.”

Immersion in the euro area, industrial production and the prospect of a rate cut by the European Central Bank after the meeting on Thursday also held policy of the euro in the failures.

The euro fell to 0.5 per cent of $ 1.3125 against the U.S. dollar, 0.9% to Y116.85 against the yen and lost 0.8% to £ 0.9025 against the pound sterling .

In other countries, the dollar under pressure after U.S. retail figures fell for the turnover more than expected in December.

The dollar fell to 0.5% against the yen Y89.01 and lost 0.3% to $ 1.4538 against the pound sterling.

In the meantime, Russia devalued the ruble for the third time in four days as part of an international test, in order of their currencies to a rapidly deteriorating economic outlook and the weakness of the oil market.

The Russian rubles are falling to 1.4 per cent of 36.28 against the euro-dollar basket, breaking the previous meeting of the Central Bank’s support level of 35.80.