Euro sinks further on Greek sovereign debt woes

The euro fell against other major currencies in Asia on May 23, weighed down by rekindled worries about eurozone sovereign debt after Greece's credit rating was slashed, dealers said. The euro fell to $1.4078 in Tokyo afternoon trading from 1.4155 in New York late Friday. The single European currency fetched 115.36 yen, down from 115.66. The dollar rose to 81.94 yen from 81.70 yen. The euro may fall below 1.4000 this week amid ongoing concerns that Greek debt problems may spread to other nations on Europe's periphery, said Yoshio Yoshida, a trader at Mizuho Trust and Banking. Uncertainties over the European economy suggest that the European Central Bank will not have a reason to justify an immediate rate hike, he said. "The euro is likely to search for the bottom this week as Greek debt woes appear to be spreading to other countries," Yoshida told Dow Jones Newswires. The euro dropped to an all-time low of 1.2348 Swiss francs in early trade before pulling back to 1.2375, against 1.2417 late on May 20. The European currency dived after Fitch Ratings on May 20 slashed Greece's credit rating by three notches to B+, citing its growing problems in getting its public finances in order. There has been much speculation that Greece might have to restructure or reschedule its debt, a move that some fear could plunge the eurozone back into the kind of turmoil it suffered during the financial crisis of 2008. Fitch said it expects substantial new money will be provided to Greece by the EU and IMF, and therefore "Greek sovereign bonds will not be subject to a 'soft restructuring' or 're-profiling' that would trigger a 'credit event' and default rating". Standard & Poor's downgrade on May 20 of its outlook for Italy from "stable" to "negative" dealt another blow to the beleaguered euro. Safety experts warned ash from an erupting Icelandic volcano that closed the country's airspace may blow across large swathes of western Europe, raising fears of new flight chaos. But experts said the impact should not be as far-reaching as 2010, when a similar event caused widespread flight cancellations. The dollar rose against regional Asian currencies. The dollar rose to Sg$1.2446 from Sg$1.2349 on Friday, to 8,556.00 Indonesian rupiah from 8,533.00, to Tw$28.86 from Tw$28.76 and to 1,093.10 Korean won from 1,082.30. The dollar also firmed to 30.35 Thai baht from 30.25 and at 43.34 Philippine pesos from 43.14.