The euro came within two cents of a five-week low after European Commission President Jose Barroso said the eurozone is confronting a “truly systemic crisis.” Word that the European Central Bank was buying up Spanish and Italian debt helped to reverse that fall, however. The pound fell as well on bad economic news out of Britain.
Bloomberg reported Wednesday that Barroso told the European Parliament that Europe’s economic recovery has stalled. He added that without economic growth in Europe there was “no way out of the crisis.”
Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said of the joint currency’s weakness, “Each day that goes by the situation is getting worse, and it’s inevitable under those circumstances that the currency comes under pressure. There’s unbelievably difficult decisions that lie ahead for Europe in terms of resolving this crisis.” The ECB’s purchases of Italian debt were larger than usual, according to unidentified sources familiar with the transactions.