By: Barbara Zigah

With growing concerns that Greece’s problems are escalating, the Euro dropped to a 3-week low against the U.S. Dollar in Asian trade. The Greek government’s plans to implement new austerity measures that were demanded under the new bailout terms have resulted in violent protests on the streets of Athens. One forex manager in Tokyo noted that investors are increasing concerned that a consensus won’t be reach on how best to deal with Greece’s debt burden. He believes, as many analysts do, that a Greek debt default could tear apart the entire Eurozone’s financial system.

The Eurozone’s banking sector is also coming under pressure because of Greek debt. Moody’s rating agency cautioned those French banks who hold a fair amount of Greek bonds that it was likely that their own credit ratings could be downgraded and that the agency would closely monitor the situation.

At 3:26 p.m. Tokyo-time, the Euro was trading against the greenback at $1.4093, the lowest price in 3 weeks after breaking through several support levels. The U.S. Dollar Index, which measures the greenback’s value against a weighted basket of currencies, rose to 75.886, a 3-week high, following yesterday’s 1.7% rise.