Euro Tumbles to Four-Week Low Versus Dollar on Italian Turmoil

The euro slid to a four-week low versus the dollar as Italian bond yields climbed to euro-era records after a firm raised the deposits it demands for clearing the nation’s securities, intensifying Europe’s debt crisis.

The shared currency fell to a two-week low versus the yen on concern Italy will join Greece in struggling to form a new regime strong enough to implement austerity measures. The dollar rose as U.S. 10-year note yields declined the most in a week as demand for refuge surged. South Africa’s rand tumbled after Moody’s Investors Service lowered its outlook on the nation’s sovereign debt rating. Stocks plunged.

“The main driver was the move up in Italian yields, and that created a broad-based sentiment of risk aversion through the market, and that sent equities lower and the dollar higher across the board,” said Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal.

The euro slumped 1.8 percent to $1.3589 at 12:26 p.m. New York time and touched $1.3553, its lowest level since Oct. 10. It weakened 1.7 percent to 105.70 yen and touched 105.32, the least since Oct. 26. The yen was little changed at 77.76 per dollar after earlier touching 77.54, its strongest level since Oct. 31, when it set a post-World War II record of 75.35.

“The euro may find a little bit of support in the mid- $1.35s, but it depends how far the market wants to push it and whether or not we see any concrete news out of Europe to try to stem this,” Perrier said.