Euro drops against dollar

London: The euro fell for a fourth day against the dollar as Germany’s economy ministry said the outlook for faster growth is fading amid the currency-bloc’s sovereign-debt crisis.

The greenback and yen rose versus most of their major counterparts as China’s export growth collapsed, boosting demand for the currencies as havens. South Africa’s rand had the biggest decline against the dollar among the most actively traded currencies. The krona fell as Sweden’s central bank Deputy Governor Lars E. O. Svensson was quoted as saying the Riksbank hadn’t done enough to stimulate the economy.

“I can’t see any reason to buy the euro,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd, a unit of Japan’s third-largest banking group by market value. “The euro region’s economy has almost no upside.”

The euro fell 0.2 per cent to $1.2282 at 9:58 a.m. London time. It was 0.3 per cent lower at 96.42 yen. Europe’s common currency has slid 0.9 per cent this week against the greenback and 0.8 per cent versus the yen. The US currency gained 0.1 per cent to 78.50 yen today.

“Hopes that the global economy would revive quickly after moderate growth in the winter months are proving premature amid a renewed worsening of the bank and debt crisis,” Germany’s economy ministry said in its August monthly report.

ECB Survey

Economists surveyed by the European Central Bank reduced their 2013 growth projection to 0.6 per cent from 1 per cent, according to the institution’s monthly bulletin released yesterday. The region’s economy is likely to shrink 0.3 per cent this year. Expansion has slowed as a sovereign-debt crisis prompted five of the trading bloc’s 17 states to seek international bailouts.

Option premiums for the euro against the dollar, measured by implied volatility, touched a four-year low this week.

Six-month implied volatility for the euro against the dollar was at 10.3 per cent, after reaching 10.1 per cent on August 6, the least since August 2008. Historical volatility was at 9.12 per cent today, nine basis points from a four-year low.

The krona dropped 0.2 per cent to 6.7006 per dollar and was little changed at 8.2293 per euro.

Sweden’s main lending rate has been too high in the last 15 years, resulting in unemployment that has been 0.8 percentage point higher than it would have been with a looser monetary policy, Dagens Nyheter cited Svensson as saying.