Euro sinks to 21-month low as Greek exit fears rise
New York, May 23, 2012
The euro plunged to a 21-month low against the dollar on Wednesday as investors dumped the currency on growing fears of a Greek euro zone exit and widespread doubts about the outcome of an EU summit later in the day.
The euro fell to $1.2615 on trading platform EBS, dropping below the 2012 low of $1.2624 set in January to mark its lowest since August 2010 as real money investors, corporates and macro funds stepped up euro selling. It was last at $1.2668, down 0.1 percent.
EU leaders are expected to discuss growth-boosting measures but are not expected to produce any plan that would restore optimism among investors, especially given Germany's strong opposition to joint euro bonds.
Investors are doubtful that the leaders will come up with any measures to calm fears that have grown since an inconclusive Greek election earlier this month left the country on the path to bankruptcy and a possible exit from the euro zone.
"The whole problem of Greece, of fiscal retrenchment in the euro zone, the lack of growth across the region, and the reactive nature of the authorities are all ongoing," said Richard Batty, investment director for multi-asset investing at Standard Life Investments in Edinburgh, Scotland.
"We just don't think there's a quick fix. The unresponsive nature of the authorities with the markets seemingly forcing authorities to action, to our mind is very unhealthy for the euro zone. " - Reuters