The euro fell to two-month lows against the dollar and Swiss franc as European finance ministers struggled to agree on how to provide additional aid for Greece, curbing demand for the region’s common currency.
Europe’s shared currency pared its drop after German newspaper Bild-Zeitung reported that Germany favored combining aid payments intended for Greece into a single package. Euro-area policy makers gave the indebted nation two extra years to lower its budget deficit yesterday, pledging to plug the resulting financing gaps. The pound snapped four days of declines against the dollar after data showed U.K. inflation quickened last month.
“Greece remains unsustainable and a credible solution needs to be found,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “There’s a press report from Germany stating that Greece is to get 44 billion euros in one aid payment. I don’t think this is a strong enough reason to support a full rebound in the euro.”
The common currency was little changed at $1.2701 at 8:03 a.m. New York time, after falling to $1.2666, the weakest level since Sept. 7. It slipped to 100.92 yen, weakening for a fifth day. Japan’s currency was little changed at 79.46 per dollar.
Euro-area finance ministers will reconvene in an “extraordinary meeting” next week to discuss Greece’s financing needs, according to a statement read out by Luxembourg Prime Minister Jean-Claude Juncker at the conclusion of a gathering in Brussels late yesterday. International Monetary Fund Managing Director Christine Lagarde said after the meeting that Greece’s creditors had “different views.”
“Investors are nervous, which underpins the market strategy of selling euro on the rallies, sending it down to multi-month lows,” said Valentin Marinov, head of European Group of 10 foreign-exchange strategy at Citigroup Inc. in London. That European ministers delayed a decision on Greece “was largely expected, but there is no clarity about how they will fund the additional needs,” he added.
Germany plans to bundle aid payments to Greece, Bild- Zeitung reported, citing government sources it didn’t identify. The disbursement would consist of 31.3 billion euros from a second-quarter aid plan that hasn’t been paid out yet, 5 billion euros from funds earmarked for the third-quarter and 8.3 billion from the fourth-quarter, the newspaper reported.
Switzerland’s franc was little changed at 1.2047 per euro, after appreciating to 1.2045, the strongest level since Sept. 12.
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