Euro Drops to Lowest Level in Seven Weeks Against Dollar Amid Greek Crisis

The euro dropped to a seven-week low versus the dollar as Greece moved closer to defaulting on its obligations, bolstering concern the region’s sovereign-debt crisis is worsening.

The yen reached its strongest level versus the euro since the Group of Seven nations intervened in March to curb its gains after a record earthquake. Greece’s debt rating was cut by Fitch Ratings. Spanish voters may defeat Prime Minister Jose Luis Rodriguez Zapatero’s Socialists, who have cut spending to fight the debt crisis, in regional elections Sunday, polls show.

“The European debt markets are particularly unsettled at this point, and any unsettling headlines certainly have the potential to hurt the euro,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “Policy makers do appear to be fairly resistant to any kind of change in the terms or conditions surrounding Greek debt. It’s negative for the euro.”

Europe’s shared currency fell 1 percent yesterday to $1.4161 and touched $1.4048 on May 16, the lowest since March 29. On the week, it gained 0.3 percent, from $1.4119 on May 13. The euro slid to 113.42 yen on May 16, the lowest level since March 18. It rose 1.4 percent over the past five days to 115.69 yen in its first weekly advance this month. The dollar strengthened 1.1 percent to 81.70 yen, from 80.80 on May 13.

Currencies of commodity-exporting countries including South Africa and Brazil rose as the Thomson Reuters/Jefferies CRB Index of 19 raw materials increased 0.9 percent.