The EURO fell below the Y100 mark for the first time since June 2001 on Friday, pushed lower by continued pessimism toward Europe’s debt problems. At 1053 GMT, the single currency was at Y100.10, having dipped as low as Y99.96.
Now that this psychologically key barrier has been breached, Tokyo traders say the EURO will likely extend its falls on the back of a large number of automated stop-loss selling orders around Y95.00. Some analysts point to a new floor for the currency around Y90.00, just above its all-time low of Y88.93 on Oct. 26, 2000. The EURO was launched in 1999.
While attention has been mainly focused on the yen’s rise against the dollar, where it remains near record-high levels reached in October, the euro’s fall compounds the stress being put on Japan’s export-oriented manufacturers. Given that lower revenue from dollar-priced goods has been largely offset by the lower production costs in the U.S., some economists say the yen’s rise versus the EURO could have an even greater impact as manufacturers have smaller production bases there.
Japan also competes with Germany in sales of high-technology industrial goods.
Analysts say that the debt problems, with Italy now at the forefront of concerns, will continue to pressure the EURO through until at least March.
EasyForexNews Research Team