The EUR fell yesterday to its lowest level in 9 months against the Japanese yen and more than 6 months against the U.S dollar. The single currency dropped to $1.3918, its lowest since mid-July, before edging back to $1.3923, down 0.4% on the day. The EUR also fell as far as 124.81 yen, weakest the EUR/JPY has been since April, to stand 0.6% down on the day.
The 16-nation currency weakened for a 4th day against the greenback after the cost to protect Greek government bonds from default climbed to a record and before a report showed the Euro-zone's unemployment rate reached an 11-year high. Adding to pressure on the EUR were warnings from credit ratings agencies that Portugal needs to come up with a clear plan of further budget consolidation beyond 2010 to prevent downgrades after this year's budget plan failed to alleviate concerns.
The EUR may continue to depreciate against the U.S. dollar as Greek bonds and credit-default swaps show investors are beginning to doubt the nation can reduce the biggest budget shortfall in the European Union without assistance from outside.