The euro fell on Friday, keeping it on track for its worst week since early January after Spain set a softer 2012 deficit target than one agreed upon with the euro zone in a challenge to the European Union's new fiscal pact. Prime Minister Mariano Rajoy said Spain's new 2012 target of 5.8 percent of GDP was more realistic than the original goal of 4.4 percent but still fiscally demanding.
The euro dropped 0.9 percent against the dollar to $1.3191. The euro has had its worst week against the dollar since the period ended December 18 at current prices, losing 2 percent. From peak to trough, 3 US cents was lost in the last three days. Meanwhile, the dollar climbed to a 9-month high against the yen, with the Bank of Japan seen focused on monetary easing, a policy that could weaken the yen and alleviate the need for direct intervention in currency markets.
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