The Euro dropped to its highest low in last two months against the greenback on Friday’s trading session as the concern about the Portugal debt situation rose. The news regarding Portugal sovereign debt created more fears among investors as the market hadn’t digested the Ireland’s debt situation.
Many believe that Portugal would have to follow the same financing pattern Ireland is opting for. Moreover investors are shaken by the Ireland’s debt situation which has resulted in to high financing costs for Portugal and Spain.
On the other hand news of Portugal looking for bailout and Spain seeking external help to manage its debt were totally denied by European officials.
The Euro declined more than 1 percent for the day to 1.3217 against the greenback. It was very near to its lowest since September of $1.3200 which is also taken as its support level.
Other than Portugal and Spain sovereign debt crisis are also faced by countries like Italy which happen to have a huge trade deficit. Currency strategist Manuel Oliveri from UBS in Zurich commented, “Peripheral issues are unlikely to go away in the short term and the euro will remain under pressure into the end of the year.”
The Euro also dropped 0.7 percent against the Japanese Yen while declined 0.8 percent against the Swiss Franc on the news of senior bondholders to participate in Ireland’s bail out.
Head of currency research Simon Derrick from Bank of New York Mellon stated, “Our data shows there are noticeable bond outflows from Spain and Italy, which suggests investors are becoming more unsettled, the case looks set for further euro weakness.”
