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Tuesday, May 24, 2011

Euro Tumbles to Record Low Against Franc on Debt Concern; Dollar Advances

The euro slumped to a record low against the Swiss franc amid deepening concern Europe’s sovereign-debt crisis will worsen, damping the appeal of the region’s assets.

The dollar rose against all of its 16 most-traded peers as the euro slipped below $1.40 for the first time since March. Italy faced a possible credit-rating cut, and Spain’s ruling party was routed in local voting. Australia’s dollar was among the worst performers versus the greenback after a Chinese manufacturing gauge fell to a 10-month low.

“We’ve moved a notch above looking at Portugal, Greece and Ireland and are evaluating prospects for what are the relatively stronger nations of Spain and Italy,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “What’s making the market uncomfortable today is that there is very little growth in the periphery to boost a fiscal solution for any of these nations.”

The euro weakened 0.2 percent to 1.2403 francs at 1:20 p.m. in New York, after earlier reaching 1.2324, the weakest level since its 1999 debut. The European currency fell 0.8 percent to $1.4045 after reaching $1.3970, the least since March 17. It dropped 0.8 percent to 114.82 yen, from 115.69 yen on May 20. The dollar gained 0.1 percent to 81.81 yen, from 81.70.

Europe’s shared currency declined 0.6 percent over the past week, according to Bloomberg Correlation-Weighted Currency Indexes, which track 10 developed-nation currencies. The greenback gained 0.3 percent. The franc, perceived as refuge currency, is up 0.5 percent.

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