Euro under Pressure on Spain Worries
The euro plumbed two-year lows in Asia on Thursday as nervous traders ditched the single currency for safer units, including the yen and dollar, amid worries over Spain's faltering bank sector.
The euro changed hands at $1.2363 in Tokyo morning trade, against $1.2366 in New York late Wednesday, while it bought 97.54 yen, down from 97.76 yen.
The euro has not fallen below the 97-yen level since 2000.
Meanwhile, the dollar weakened to 78.90 yen from 79.06 yen.
The euro was likely to remain under pressure on Thursday, moving in a range of $1.2300 to $1.2420, said a senior trader at a major Japanese trust bank.
"The market continues to feel uneasy with the situation in Europe," he told Dow Jones Newswires.
All eyes were on Spain, which is battling to contain fears of financial collapse and scrambling to fund a major banking rescue as its debt risk premium rocketed to a euro-era record.
The interest rate on Spain's 10-year bonds Wednesday shot to 6.703 percent -- unsustainable over the longer term -- as the nation fought to avoid being the next victim of the Eurozone crisis.
When compared to safe German debt, investors in Spanish bonds were demanding an additional 5.41 percentage points in interest, a giant premium that will add to fears that Madrid's problems are far from over.
Spanish banks, hugely exposed to a property market that crashed in 2008, are at the heart of market concerns.
Hardest hit lender Bankia has asked the government for 19 billion euros ($23.5 billion) in capital in addition to 4.465 billion euros invested by the state earlier this month to salvage its books.
In debt-riddled Greece, opinion polls Wednesday showed rival pro-bailout and anti-austerity parties vying neck and neck in June 17 elections that could determine the nation's Eurozone future.
Source: Agence France Presse
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