December 30, 2011

Euro Set to Record Second Annual Fall Against Dollar

Consecutive drops not seen in 10 years as euro drops

After a year of battering, and on the verge of another anniversary, the euro is shrouded in doubt. As 2011 draws to a close it looks likely that the joint currency will record its second annual drop in value, something it has not done in 10 years.

Six straight days of falls have seen the euro drop to below 100 yen for the first time since July 2001, and it has fallen against the dollar now for a second straight year; early Friday morning it stood at $1.2954 in New York. Bloomberg reported that it is the worst performer among 10 developed-nation currencies this year, declining 2%.

Brian Kim, a currency strategist in Stamford, Conn., at Royal Bank of Scotland Group, was quoted saying, “There’s fatigue in the sense that the euro-zone problems–we thought they’d be fixed partially by now, but obviously they’re not. There’s a modest appetite for risk and there could be a little bit more of a bounce in the year-end.”

Analysts surveyed by Bloomberg foresaw additional drops in the joint currency’s value, with one group expecting it to weaken to 99 yen in 2012 and another seeing a fall to $1.28 in Q2.

Amid plans for French President Nicolas Sarkozy to meet with German Chancellor Angela Merkel on Jan. 9, continuing their discussions on the euro zone debt crisis, the currency continues to be threatened by ongoing unresolved problems in Greece and Italy, as well as an economic slowdown throughout most of Europe.

Peter Rosenstreich, chief currency analyst at Swissquote Bank in Geneva, said in the report, “The backdrop is still the eurozone debt crisis and concerns about growth. The dark clouds are getting darker. We’re seeing a death by a thousand cuts.”

 

Reprints Discuss this story
This is where the comments go.