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Euro falls as Irish credit rating cut

In Uncategorized on December 20, 2010 at 6:27 am

TOKYO, Dec 20, 2010 (AFP) – The euro fell against other currencies in Asia on Monday on worries over the eurozone’s public finances after Moody’s slashed debt-stricken Ireland’s credit rating, analysts said.


The euro fell to 1.3154 from 1.3185 dollars in New York late Friday and to 110.35 yen from 110.78 yen. The dollar firmed to 84.00 yen from 83.94 yen.


Moody’s Investors Service on Friday cut its credit rating on Ireland by five notches, citing uncertainties over the country’s economy and public finances.


It came a day after European leaders agreed at a Brussels summit to set up a permanent financial stability mechanism from 2013 to shore up the euro amid fears Portugal and Spain may need bailouts after Irish and Greek rescues.


But there was no decision to increase its size beyond the bloc’s temporary 750 billion euro fund or allow it to purchase government bonds, or introduce a common European bond, John Kyriakopoulos of National Australian Bank noted.


“As such, European sovereign debt concerns are likely to linger into the New Year,” he wrote in a note, adding investors needed to watch European bank funding costs.


The failure to enlarge the size of the bailout fund was disappointing “given worries that it is insufficient to cope with the bailout of larger eurozone countries if needed,” said Frances Cheung at Credit Agricole CIB.


The South Korean won fell after South Korea ordered civilians on five border islands to take shelter ahead of a live-fire exercise Monday despite North Korean threats of deadly retaliation.


The unit extended its early losses against the safe-haven US dollar, which in morning trade fetched 1,167.40 won from 1,163.40 earlier.


But the news hardly moved dollar-yen rates with the yen also drawing buying as a safe currency, analysts said.

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Source: SGGP

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