Euro drops on Greece fears

The euro fell against the dollar on Thursday on persistent worries over Greece's debt problems after a report said the country was not optimistic about aid from euro zone members. The euro also fell to a 17-month low versus the Swiss franc after a Swiss National Bank board member said Swiss firms and consumers should prepare for rising borrowing costs and exchange rates set freely by the market.
An unidentified Greek official quoted in the report said Greece was increasingly pessimistic about the prospect for receiving assistance at a March 25 European Union summit and may seek International Monetary Fund aid during the April 2-4 Easter weekend.
Greek Finance Minister George Papaconstantinou, however, denied on Wednesday that Athens may soon turn to the IMF for aid, saying all options for getting support are still open.
"Three months have elapsed since the last credit downgrade of Greece and (there is) still no credible solution on how it will obtain 56 billion euros to meet its short-term debt obligations," said Ashraf Laidi, chief market strategist at CMC Markets in London. Greece, battling with crippling debts, has said it is counting on EU leaders to approve a mechanism to help the country at next week's meeting.
But some countries - especially Germany, the EU's biggest paymaster - are wary of making concrete promises and analysts said the Dow Jones Newswires report suggested a rift between Greece and Germany may be deepening. The euro fell to a session low of $1.3587, according to Reuters data, pulling back from a five-week high hit on Wednesday. It was last at $1.3608, down 0.9 percent.
Against the Swiss currency, the euro fell as low as 1.4356, the weakest level since October 2008, when it hit an all-time low just below 1.43 francs, according to Reuters data. It was last at $1.4395, down 0.6 percent on the day. The dollar trimmed gains versus the Swiss franc and was last at 1.0578 francs, up 0.3 percent.
SNB board member Jean-Pierre Danthine said on Thursday that interest rates cannot be ultra-low forever, but the timing of tightening policy was a difficult decision for the bank. The Swiss central bank has intervened in the currency market over the past year to weaken the franc as part of its efforts to fight deflation. US data showing a fall in weekly US jobless claims, a rise in a US Mid-Atlantic business index and tame US inflation at first boosted risk appetite and weighed on the dollar. But investors quickly shifted attention back to Greece.