Euro pressured amid fears of global slowdown

Euro pressured amid fears of global slowdown
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First Published: Tue, Jan 22 2008. 12 19 PM IST
Updated: Tue, Jan 22 2008. 12 19 PM IST
Tokyo: The euro came under pressure and the yen gained in Asian trade Tuesday on heightened fears that a US recession would take a toll on global growth including in Europe, dealers said.
The euro was hit on concern that Europe would feel the effects of a US slowdown and after top eurozone finance official Jean-Claude Juncker conceded that a recession in the world’s biggest economy “could not be ruled out.”
Currency markets followed sharp falls on stock markets worldwide as traders rushed to take cover under “safe haven” currencies like the yen and the Swiss franc, they said.
The dollar slipped slightly to 105.87 yen in Tokyo morning trade from 105.90 late Monday in London. US markets were closed Monday due to a holiday.
The euro fell to $1.4406 from 1.4440 and to 152.51 yen from 153.14. “Following falls on global equity markets, investors are shunning risk, which is pushing the yen higher against other major currencies,” said Masaki Fukui, senior market economist at Mizuho Corporate Bank’s forex division.
Global share prices have plunged on disappointment over an economic stimulus package unveiled on Friday by US President George W. Bush.
“Sliding equity markets around the world are indications that investors are starting to factor much greater global fallout from a US recession,” wrote NAB Capital strategist John Kyriakopoulos in a note.
Foreign investors including Americans and Japanese had looked towards the eurozone for higher returns due to its relatively high interest rates.
But “if the market turmoil continues and US and Japanese investors accelerate their repatriation efforts, the euro can fall steeply against the dollar and yen,” warned Thomson IFR analyst John Noonan.
The South Korean won, a strong gainer last year, tumbled to a 15-month low against the dollar. Participants remained on their toes amid uncertainty on the depth and length of market troubles.
European shares fell after heavy selloffs in China and India, which raised fears that emerging economies were not insulated from troubles in the United States as thought.
In a week thin on the US economic calendar, investors were eyeing a slew of key economic reports released on Thursday by China to see how much the Chinese economy is affected by slower US growth.
Players were also waiting ahead of the Bank of Japan’s mid-term outlook report out later in the day which the market expects to make a downward revision for fiscal year 2008.
Although the Japanese central bank is expected to keep its super-low rates unchanged at its meeting ending Tuesday, traders believe the bank may cut rates even lower this year amid slower growth.
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First Published: Tue, Jan 22 2008. 12 19 PM IST
More Topics: Forex | Asia | Euro | foreign investor | US slowdown |