MW: Euro slips vs. dollar on Stark's reported Greece remarks
By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) --- The euro extended losses against the dollar late in the Asia session Wednesday, after reports that a member of the European Central Bank's executive board said the European Union won't provide financial assistance to Greece
Jurgen Stark reportedly said that the country hasn't controlled its public accounts or worked to improve its competitiveness in recent years.
"Whoever believes that, at the end, the European Union state member will put their hands in their pockets to save Greece will end up deluded," Stark said in an interview with financial daily Il Sole 24 Ore, according to Dow Jones Newswires.
Greece is facing a mounting debt burden. The government recently admitted that the deficit will soar to more than 12% of gross domestic product this year, well above previous official projections. All three major credit-rating firms cut the nation's ratings late last year. Read more on latest downgrade of Greece.
Stark "stated emphatically that the E.U. will not save Greece, triggering a massive sell-off in the euro/dollar, which tumbled more than 50 points below the 1.4300 level within minutes of the news," wrote said Boris Schlossberg, currency strategist at GFT, in a note to clients.
The euro gained back some lost ground, but remained lower, buying $1.4332, down from $1.4360 in late North American trading on Tuesday.
The dollar index (DXY 77.76, +0.15, +0.19%) , which tracks the U.S. currency against a trade-weighted basket of six major rivals, was at 77.761, up from 77.630 late Tuesday.
The British pound bought $1.6029, up from $1.5986, and the dollar rose to 92.08 yen from 91.71 yen late Tuesday.
Currency markets had a muted reaction to Japanese media reports Wednesday that the country's finance minister, Hirohisa Fujii, will likely step down soon due to ill health. Read more on Japan Finance Minister Fujii's reported plan to resign.
In September, even before he was sworn in as finance minister, Fujii inadvertently sent the yen soaring, when he was quoted as telling reporters that a strong yen had some economic benefits and that the recent foreign-exchange moves weren't rapid.
On Tuesday, the dollar reversed and moved higher against the euro and pared declines against other rivals, after a steep drop in U.S. pending-home sales fueled demand for the greenback as a safe-haven currency. See full story.
