Euro sags to new 2-year low

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IOL world currency1 Graphic: Renjith Krishnan.

The euro fell below $1.22 for the first time in two years Thursday, dragged lower by eurozone debt fears and concerns about slowing growth in the global economy.

Investors sought the relative safety of the dollar and yen, analysts said.

The euro fetched $1.2203 around 23:00 SA time, down from $1.2238 at the same time Wednesday.

Earlier in the day the European single currency hit $1.2167, its weakest level since late June 2010.

The euro also retreated against the Japanese currency, to 96.75 yen from 97.58 yen late Wednesday.

The dollar slipped to 79.28 yen from 79.74 yen.

“Risk has traded with a downside bias over the last few days as the initial enthusiasm for the EU summit last week has changed to worries over a deteriorating global growth picture,” Bank of America Merrill Lynch analysts said.

Some pointed to the US Federal Reserve's minutes of its June policy meeting, released Wednesday, which disappointed by not delivering a clear signal on hoped-for new economic stimulus.

Vassili Serebriakov, currency strategist at Wells Fargo Bank, said the risk-averse mode was producing strong gains for the dollar and yen.

Though there were rate cuts in Brazil and South Korea, and a “moderate” adjustment to the Bank of Japan's policy stance, “those moves have done little to support market sentiment,” he said.

The market awaited China's economic growth data for the second quarter on Friday amid concerns that the numbers may come in unexpectedly low.

The world's second-largest economy grew an annual 8.1 percent in the first quarter of 2012 - its slowest pace in nearly three years.

The dollar also firmed against other major currencies compared with late Wednesday, rising to 0.9838 Swiss francs from 0.9811


The British pound fell to $1.5429 from $1.5503. - Sapa-AFP

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