Euro weakens to lowest since 2000 against yen on Europe concern

July 24 (Bloomberg) -- The euro slid to the lowest level in more than 11 years versus the yen as speculation Europe’s sovereign-debt crisis is worsening spurred demand for safety.

The 17-nation currency dropped to the weakest versus the dollar since June 2010 as a report said Greece may miss debt- reduction targets. The euro fell for a fifth day against the yen after Moody’s Investors Service cut its outlook for Germany and the Netherlands yesterday. The yen rose versus all of its 16 most-traded peers on haven demand even as Japan’s government voiced readiness to combat its strength.

“The Moody’s warning is significant,” Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London, said in a telephone interview. “Investors are becoming increasingly concerned about their ability to access markets. There are lots of indications that the euro should be weaker.”

The euro dropped 0.8 percent to 94.24 yen at 2:08 p.m. New York time and reached 94.12 yen, the lowest since November 2000. The five-day losing streak is the longest since the period ended May 31. The single currency lost 0.5 percent to $1.2054 and touched $1.2043, the weakest level since June 2010. The yen rose 0.3 percent to 78.18 per dollar.

The shared currency has slumped 5.7 percent this year, the worst performance among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen advanced 0.3 percent, and the dollar gained 2.2 percent.

Franc Parity

Switzerland’s franc weakened, approaching parity with the dollar for the first time since December 2010. The currency depreciated 0.5 percent to 99.63 centimes per dollar and was little changed at 1.2010 per euro.

Spanish bonds dropped, pushing up the 10-year yield to a euro-era record 7.636 percent. The yield on similar-maturity Italian bonds climbed to 6.598 percent, the most since Jan. 17.

“We are going to see another bailout for Spain,” Adam Myers, a senior foreign-exchange strategist in London at Credit Agricole SA, said in a radio interview on “Bloomberg - The First Word” with Ken Prewitt. “We’ve reached a point now where the interest expense is unsustainable at current levels.”

Spain’s government hasn’t ruled out leaving the euro as it considers options including an international bailout, El Confidencial newspaper reported, citing people close to Prime Minister Mariano Rajoy it didn’t name. While an exit would be disastrous in the short-term, it would then allow Spanish economy to improve competitiveness, the online website reported.

Carmen Martinez Castro, Spain’s deputy minister in charge of communication, declined to comment on the report.

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