Euro at lowest level since Lehman collapse as breakup concern rises
The euro fell to its lowest level since the collapse of Lehman Brothers on concern that the 16-nation currency may be headed for disintegration.
The shared currency fell through $1.24 for the first time since November 2008 as German Chancellor Angela Merkel said that Europe is in a "very, very serious situation".
'El Pais' reported that France threatened to leave the euro during talks that led to this week's almost $1trillion (€807bn) bailout.
The yen rose against its most-traded counterparts, including Brazil's real and the Australian dollar, as oil retreated for a fourth day and equities fell. Gold reached an all-time high.
"The euro is doomed," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.
"It's like a clown without its makeup. The strains among the partners are becoming clear and it's becoming harder to see global growth not being threatened by this. The Australian dollar is tripping over this unfunny clown."
The euro fell 1.3pc to $1.2377 in New York, from $1.2535 on Thursday. It touched $1.2359, the lowest level since October 2008. The euro fell 2.2pc to 113.77 yen, the lowest level in a week, from 116.27. The dollar traded at 91.89 yen, from 92.75.
The Australian dollar fell 1.9pc to 81.50 yen and the real declined 2.7pc to 50.905 yen on speculation investors reversed carry trades that had profited from Australia's 4.68pc one-month deposit rate and Brazil's 9.5pc central bank rate. Japan's benchmark rate of 0.1pc makes the yen a popular funding currency for such trades.
Such strategies lose money as the funding currency gains because it costs more to repay the loan.
Spain's IBEX 35 index of stocks slumped as much as 6.7pc, the most since October 2008, to 9,310.80.
The Standard & Poor's 500 Index fell 2pc to 1,134.18. Crude oil for June delivery fell as much as 4.5pc to $71.05 a barrel on the New York Mercantile Exchange. That's the lowest price since February 9.
Gold reached an all-time high of $1,249.70 an ounce in New York, while bullion advanced to all-time highs in euros, Swiss francs and British pounds.
"The stock market is down, commodities are following suit," said Fabian Eliasson, head of US currency sales at Mizuho Financial Group in New York.
"People are selling the euro across anything and buying the yen across anything."
Europe's currency has fallen 2.3pc this week versus the dollar and decreased 1.5pc against the yen on concern that the region's most-indebted nations will still struggle to contain deficits even after policy makers had provided an almost $1trn bailout.
Ms Merkel, speaking yesterday at a panel discussion by Phoenix television, said that success is not yet guaranteed.
Asked about disagreements with EU partners, she said that "some arguments are worth it", without elaborating.
Yields on 10-year Greek government bonds rose to 8.015 per cent, the highest since Europe announced the rescue plan this week, after Moody's Investors Service said there is a "greater than" 80pc chance it will cut its rating on Greece's debt again. (Bloomberg)