The euro fell to a nearly nine-month low against the dollar on Friday as questions remained about a rescue deal for debt-stricken Greece and China unexpectedly raised bank reserve levels.
Investor appetite for stocks and higher-yielding currencies like the Australian dollar was further dampened after China raised the level of bank reserves for the second time this year. The move stoked worries aggressive monetary tightening by China may also slow global recovery.
In midday New York trading, the euro EUR= was down 0.4 percent at $1.3625, after dropping to $1.3533, its weakest since May 2009, according to Reuters data.
“It’s very difficult to see a silver lining for the euro at the moment as it’s very difficult to see a solution for Greece,” said Jane Foley, currency research director at Forex.com in London.
“And certainly, with China slowing, too, it just enhances the safe-haven behavior toward the dollar.”
Falling risk appetite also hit demand for higher-yielding currencies, with the Australian dollar AUD=down 0.8 percent and the New Zealand currency NZD= off 1 percent against the greenback.
The single European currency also struck a decade low against the Australian dollar EURAUD=R at A$1.5275.
European Union leaders Thursday broadly pledged to support Greece, the bloc’s finance ministers are expected to hash out a more detailed contingency plan to ease the country’s debt crisis.
“We are debating a determined and coordinated plan from the euro area to help Greece…but leaders are yet to decide the precise measures to help the Greek economy,” Luxembourg’s Prime Minister. Juncker said.
A role for the International Monetary Fund also could be discussed. Greek Prime Minister George Papandreou on Thursday noted the EU doesn’t have the kind of experience or financial resources the IMF does. Several euro-zone policy makers have rejected the idea of an IMF-led bailout, however, saying the euro zone should solve its own problems.