The euro dropped below $1.30 for the first time in more than 10 weeks amid speculation Europe’s debt woes will worsen and as unemployment in the region rose to the highest in more than 12 years. The yen strengthened to its highest since Sept. 15 against the euro amid speculation China will take more measures to cool its economy. The Swiss franc also rose against the common currency as investors shunned riskier assets. Debt concern has shifted to Spain and Portugal since Nov. 28, when European governments sought to bolster the euro by giving Ireland an 85 billion-euro ($111 billion) bailout package. Portuguese, Italian and Spanish government bonds slumped. “The downward pressure is strong, really strong now, and we need the politicians to pull something out of the bag to stop that,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “It’s important now to stop the rot. The market has to be reassured about Spain and that is where the politicians have got their work cut out.” The euro traded 0.7 percent weaker at $1.3031 as of 6:54 a.m. in New York, after dropping to $1.2980, the weakest since Sept. 16. It slumped 1.3 percent to 109.16 yen, from 110.60. The Japanese currency was at 83.80 per dollar, from 84.26 yesterday. Spanish bonds fell yesterday by the most since the start of the euro era. The difference in yield, or spread, between 10- year Italian securities and similar-maturity German debt rose to more than 200 basis points for the first time since 1997. Jobless Rate Data published today showed the euro-area jobless rate increased to 10.1 percent in October, the highest since July 1998, from 10 percent in September. Consumer prices rose 1.9 percent in November from a year earlier, the European Union statistics office in Luxembourg said in an initial estimate today. The yen strengthened versus all 16 of its major peers after the China Daily quoted Zhong Jiyin, an economist at the Chinese Academy of Social Sciences, as saying his nation needs to raise interest rates by 2 percentage points. China’s recent increases in the reserve-requirement ratio won’t be enough to reverse excessive liquidity in the system, Zhong wrote in a commentary in the newspaper. The People’s Bank of China has ordered banks to set aside larger reserves twice in two weeks after raising interest rates in October, the first increase since 2007. China’s actions are “something that is obviously causing a safe-haven play and that will benefit the yen, the Swiss franc and the U.S. dollar,” said Foley. Swiss Franc The Swiss franc rose against 15 of its 16 most actively traded counterparts monitored by Bloomberg as investors sought a refuge amid lingering concern about the risk of contagion from the Irish debt crisis. The franc strengthened 1 percent to 1.3001 per euro from 1.3127 yesterday. It was little changed against the U.S. currency at 99.94 centimes per dollar. The currency has gained 8.5 percent against its major trading partners in the past six months, according to Bloomberg Correlation-Weighted Currency Indexes, making it the best- performing currency during that period. The dollar headed for its first monthly gain since April against the yen on speculation the U.S. economic recovery is gaining momentum. Conference Board The Conference Board’s U.S. consumer confidence index climbed to 53 this month from 50.2 in October, according to a Bloomberg survey before today’s report. “We’re likely to get a series of favorable economic data for the dollar,” said Keiji Matsumoto, a currency strategist in Tokyo at Nikko Cordial Securities Inc. “Improving consumer sentiment is one of the factors that pushes the greenback higher.” The dollar has gained 0.5 percent against a measure of the currencies of 10 developed nations this year, according to Bloomberg Correlation-Weighted Currency Indexes. The yen has risen 13 percent and the euro has weakened 9.5 percent. The pound declined versus the dollar for the eighth straight day, the longest streak since September 2008. It traded at $1.5536, near the weakest since Sept. 21. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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