Euro takes a tumble over Greek uncertainty
THE euro tumbled after EU leaders offered few details of an agreement it brokered to help Greece weather its debt crisis.
The single currency fell below $1.37 and approached 87p sterling after the statement left open how the EU would respond to a fresh wave of speculative attacks against Greece, or countries such as Spain and Portugal, which are struggling to cut their budget deficits.
"Right now, investors don't know if this accord is the real thing," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Connecticut. "It doesn't have any meat on its bones yet."
The euro dropped 0.5pc to $1.3683, from $1.3737 yesterday.
Luxembourg Prime Minister Jean-Claude Juncker said the exact nature of potential financial assistance to Greece has not been decided.
"We were proposing to issue euro bonds years ago. This proposal was rejected by several member states," Mr Juncker said in Brussels yesterday.
"So this instrument is not at our disposal. We will decide on the exact nature of the instrument to be used when this situation will have to be addressed."
The euro has fallen 5pc against the dollar this year on concern that nations with the biggest debt burdens may struggle to meet their obligations.
The euro was also weighed by comments from Bundesbank president Axel Weber saying he cannot rule out that the German economy may contract in the first quarter.
European Commission President Jose Barroso said reduced bank lending is holding back economic recovery in Europe and that the region's growth potential has been "halved by the crisis". (Bloomberg)