In early trading in London, the Euro lost significant ground against other major currencies as officials in Europe and the U.K. meet to stave off a worsening financial sector. Conversely, the Japanese Yen saw a rise in its price as a result of global investors seeking safe haven currencies and reducing their risk exposure.
The fallout from the financial crisis that began with the collapse of the U.S. housing market has hit European banks hard. Last week, Irish, German, Austrian and Danish government officials pledged that their respective governments would guarantee deposit accounts at private banks; Sweden today also made such a pledge. Nonetheless, share prices of European banks lost 5% in heavy trading today.
The fragmented response of the members of the European Union to the global financial crisis has drawn the ire of critics. Chris Turner of London’s ING made the observation that the uncoordinated policy response leads to fewer reasons for investors to consider the Euro, and that the “love affair” is basically over.
In mid morning trading in London, the Euro lost 1.3% and traded at $1.3583, a minute increase from its lowest trading price ($1.3542, August 2007) in over a year. Against the Japanese Yen, the Euro lost 3.5% to $139.82, the lowest in over 2-1/2 years. The U.S. Dollar also lost 2% against the Yen, trading at 103.10 Yen.