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April 16, 2012 at 05:23 AM
The euro fell against its peers for the second day in a row on Monday in advance of planned Spanish debt sales, and fell below $1.30 for the first time in two months in morning trading. It also dropped to its lowest level in two years against the British pound.
Bloomberg reported Monday that Spain planned sales of bonds and bills during the upcoming week, and concerns over its debt drove the joint currency lower. It did not help nervous investors that Spain’s deputy economy minister called last week for the European Central Bank (ECB) to do more to contain the debt crisis by buying more bonds.
The economy minister, Jaime Garcia-Legaz, said that the ECB should “step up purchases of bonds” after Prime Minister Mariano Rajoy refused to meet the deficit targets set by the predecessor Spanish government at the behest of the European Commission (EC). Rajoy is still endeavoring to convince investors that he can contain the Spanish economic crisis.
The euro fell against 12 of its 16 major currency counterparts, including the yen, in the wake of Garcia-Legaz’s comments. At the same time, Spanish bond yields for 10-year instruments rose as much as 18 basis points. Five-year credit default swaps (CDS) set a new record in advance of an auction for Spanish 12- and 18-month bills set for Tuesday.
