By: Barbara Zigah
The common currency Euro continues to hold close to a 4-year trough versus the U.S. Dollar; it also approaches an 8½-year low against the Japanese Yen on renewed investor worries about the stability and health of the banking sector in the Euro-zone nations. LIBOR, which is the inter-bank rate for a 3-month loan, has risen to a new 10-month peak indicating that, even among and between European lenders, the issue of creditworthiness is called into question. This past weekend, Spain’s central bank took over a struggling savings bank in the country, a move that proved analysts’ theory that the Euro-zone banking sector is weak and flamed concerns that more banks would need rescuing.
Reporting at 2:56 p.m. (JST) in Tokyo, the Euro slipped against the greenback to $1.2285, a decline of .5% though holding above yesterday’s low trade of $1.2177. Against the Japanese Yen, the Euro traded at 110.79 Yen, a decline of .4%; yesterday, the Euro slipped to 108.83 Yen on the EBS trading platform, the lowest trade since November 2001.
Indications of tightened liquidity, including the rising LIBOR, are moving investors away from higher risk currencies to the safe haven of the U.S. and Japanese currencies. The U.S. Dollar Index, a measure of the greenback’s value versus other major currencies, gained .1% to trade at 86.844 .DXY.