TOKYO, May 24, 2010 (AFP)
Nagging worries about the eurozone debt crisis weighed on the single currency against the dollar Monday, analysts said, while military tension in the Korean peninsula also prompted further risk aversion.
The euro stood at 1.2502 dollars, down from 1.2563 dollars Friday in New York. The single unit fell to 112.60 yen from 113.02. The dollar bought 90.06 yen, nearly flat from 89.93 Friday.
The single currency may see support above 1.24 dollars if further bearish data on the eurozone crisis fails to emerge, Minoru Shioiri, chief manager FX trading at Mitsubishi UFJ Securities, told Dow Jones Newswires.
However, “nothing has changed in terms of fundamentals, they are still very negative,” said Bank of New Zealand foreign exchange strategist Mike Jones.
Satoshi Okagawa, senior dealer at Sumitomo Mitsui Banking, said tension over North Korea’s sinking of a South Korean warship was adding to worries.
A multinational investigation team said last Thursday there was overwhelming evidence that a North Korean submarine fired a torpedo to sink the 1,200-tonne corvette near the disputed border off the west coast on March 26.
The attack cost 46 lives and South Korean President Lee Myung-Bak said Seoul will cut trade links with the North, warning that his nation will immediately defend itself against any future attacks.
He also confirmed that Seoul would refer the March 26 attack to the United Nations Security Council.
The announcement prompted a wide range of investors in Asia to further cut exposure to risk-sensitive currencies, with the safe-haven yen benefiting most, Okagawa said.
“The main focus this morning is now on the Korean situation, as well as the sell-off in stocks despite Friday’s recovery in US share markets,” he said.
Investors also eyed the weak Nikkei index of the Tokyo Stock Exchange, which fell 0.28 percent by noon Monday with the yen’s relative strength against other major currencies dampening prospects for Japanese exporters.
Investors shrugged off Wall Street’s 1.25 percent rebound Friday, as markets remain concerned despite a near trillion-dollar package to prevent the troubles of debt-ridden Greece spreading to the rest of Europe.