The euro fell to an 11-year low against the yen and reached the weakest in 15 months versus the dollar after French borrowing costs rose at a bond sale today.
The 17-nation currency slumped against most major peers after France sold 7.96 billion euros ($10.3 billion) of debt today in its first auction of the year as credit companies threaten to cut the nation’s top AAA rating.
“The market reaction is rather underwhelming” toward the sale, said Jeremy Stretch, executive director of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “There are more downgrade rumors doing the rounds, while bank funding pressures also remain in focus. So while France may have passed this hurdle the market is not in the mood to give the euro any credit.”
The euro fell 0.6 percent to 98.65 yen at 10:19 a.m. London time, the weakest since December 2000. It depreciated 0.8 percent to $1.2845, the least since Sept. 14, 2010. The dollar was little changed at 76.81 yen.
The euro slid 3 percent over the past month, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, as investors sought safety amid the region’s turmoil. The dollar rose 1.6 percent and the yen climbed 3.1 percent.
France sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent from 3.18 percent in an sale on Dec. 1. The 10-year debt bid-to-cover ratio, or the number of bids received for each unit of debt sold, fell to 1.64 from 3.05. France also sold debt maturing in 2023, 2035 and 2041.
