Euro Continues to Weaken Over Greece Debt Issues

Posted February 14, 2010

The euro weakened against the US dollar as the Greece debt problems remain unsolved. The US dollar strengthened against the Japanese yen as Japan remains unable to consider exiting stimulus programs. The US dollar rose against the Brazil real as China tightens monetary policy. The Canadian dollar fell against the US dollar on lower oil prices. The Swiss franc weakened against the US dollar as the central bank sells francs in the currency market. Asian currencies generally rose against the US dollar.


The euro weakened against the US dollar as the Euro-Zone policy makers struggle to come up with a way to assist Greece with its debt problem. The problem blocking progress is that Germany (and most likely others that are less vocal) will not give financial aid to Greece when its own citizens have been sacrificing in order to reduce Germany’s budget deficit. Germany is adamant that Greece must find a way to deal with its own problems.

In fact, there are hints that Germany believes that Greece may have to leave the European Union. Whether or not that happens, it is a sign that the European Commission intends on enforcing the rules imposed on members.

The euro fell to $1.3623 against the US dollar. The finance ministers representing the European Union begin meeting today. It is hoped this meeting will end the gridlock which has prevented a workable financial plan for Greece from emerging so far.

Greece accounts for 2.7 percent of the Euro-Zone’s total economy. Greece currently has a 12.7 percent budget deficit. The European Union’s rules call for a maximum 3 percent budget deficit.

The European Union (EU) is also planning on making its first united stand against US President Barack Obama. The EU is planning on developing a document that will clearly state opposition to US calls for a limit on the size of banks and bank risk-taking.

The euro remained about the same against the Japanese yen at 122.62 yen.

The US dollar strengthened against the yen to 90.05 yen. The US could increase the benchmark interest rate by September if the economy continues to improve.  Japan, on the other hand, is not ready to discuss exiting economic stimulus programs yet.

The US dollar also strengthened against the Brazilian real to 1.8544 reais per dollar. The Brazil real is responding to China’s efforts to slow its pace of economic recovery. China is Brazil’s main export country.

The Canadian dollar weakened as China raised its bank reserve requirements in order to slow inflation. The Canadian dollar fell to C$1.0512 against the US dollar. One Canadian dollar will purchase 95.13 US cents.

Canada’s dollar is a commodity based currency and is also weakening over lower oil prices. Crude oil prices have fallen to $74.23 a barrel.

The Canadian loonie rose against the euro though to C$1.4320 over fears a Greece debt solution will not be found.

The Swiss franc weakened against the US dollar and the euro. It appears the central bank has intervened in the currency market by selling francs. The Swiss central bank has said all along it would not allow too much franc appreciation in a bid to maintain economic recovery progress.

The Swiss franc fell to 1.0777 francs per US dollar and to 1.4673 francs per euro.

The Argentinean peso weakened against the US dollar to 3.8543 pesos per dollar. This is a record low for the peso. There is speculation the central bank intends on letting the peso continue to weaken.

Chile’s peso strengthened against the US dollar to 528.65 pesos per dollar.