Profit taking leads to euro slide

The euro suffered modest losses in Tuesday in Asia, while the yen held tight to overnight gains before a further wave of cheap money from the European Central Bank which could boost risk appetite and pressurise the yen once more, reports Reuters.

News of Standard and Poor’s decision to reduce its Greek ratings to ‘selective default’, came as no surprise as Athens’ attempts to reduce its net burden was widely predicted to trigger the downturn, said traders. The euro was a $1.3392 against $1.3397 in late New York trading, having retreated from a close to three-month high of $1.3486 on Friday.

Against the yen, the euro dropped to 107.90 from a four-month high of 109.90 on Monday. That helped the Japanese currency halt its slide against other currencies too. The dollar dropped to 80.44 yen, from a nine-month high of 81.61 on Monday.

Still, the dollar was up almost six per cent in February against the yen, which has been struggling since the Bank of Japan’s surprise easing of its monetary policy. The country’s trade deficit an improving US economy, interest rate differentials and increasing oil prices have also worked towards dragging the yen down.