By Ben Levisohn and Lukanyo Mnyanda
April 6 (Bloomberg) -- The euro fell for a third day against the dollar amid speculation Greece may be having second thoughts about a plan that provides European Union and International Monetary Fund support in refinancing its debt.
Europe’s common currency slid the most versus the yen in almost six weeks after a report that Greece wants to bypass IMF involvement if it needs assistance because the conditions would be too stringent. A government official denied the report. The Canadian dollar strengthened to parity with its U.S. counterpart for the first time since July 2008 as crude oil traded near the highest in more than 17 months.
“The fear factor is back in regards to Greece,” said Dean Popplewell, an analyst in Toronto at the online currency-trading firm Oanda Corp. “People are concerned about the Greek government bypassing the IMF.”
The 16-nation currency dropped 0.9 percent to $1.3368 at 11:23 a.m. in New York, from $1.3484 yesterday. The euro fell 1.3 percent to 125.65 yen, from 127.25. It tumbled as much as 1.5 percent, the most on an intraday basis since Feb. 25. The yen rose 0.5 percent to 93.94 per dollar, from 94.37 yesterday, when it traded at 94.79, the weakest level since Aug. 24.
Greece received information from the IMF about conditions it would impose in return for aid, and officials found them “tough” and are concerned they might spark civil unrest, Market News International reported. It cited senior government people in Athens it didn’t identify. Any package would “be an IMF program decided by the IMF as it happens with each and every country,” Dominique Strauss-Kahn, managing director of the organization, said last week.
Greek Denial
A Greek Finance Ministry official who declined to be identified said today the government is not pushing to renegotiate the terms of a rescue package to exclude IMF involvement.
The report that Greece “isn’t keen on the IMF being involved in any bailout would seem to throw the whole plan into question,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. “As an investor, do you really want to hang around and see what’s happening next? The Greece story is definitely a negative for the euro.”
The euro has weakened 5.7 percent against the yen this year and 6.6 percent versus the dollar on concern Greece will struggle with its fiscal shortfall, which was four times the EU limit.
Greece needs to borrow 32 billion euros ($43 billion) this year, Petros Christodoulou, director general of the Public Debt Management Agency, said March 31 in a Bloomberg Television interview. The nation may issue between $5 billion and $10 billion in dollar bonds, the Wall Street Journal reported then, citing a Greek government official it didn’t identify.
Pound Drops
Sterling fell the most in almost two weeks as U.K. Prime Minister Gordon Brown Brown called an election for May 6 and an ICM Ltd. poll showed the vote may result in no party holding a parliamentary majority.
The pound dropped as much as 1.1 percent, the most on an intraday basis since March 24, to $1.5130 before trading at $1.5191, down 0.7 percent. It was little changed at 88.05 pence per euro.
The Canadian dollar, nicknamed the loonie, reached parity with the U.S. currency, as crude oil for May delivery touched $87.09 a barrel in New York, the highest level on an intraday basis since Oct. 9, 2008.
The loonie has advanced 5.4 percent against the U.S. dollar this year as oil, Canada’s largest export, gained 9.5 percent. The currency gained 0.3 percent today to 99.97 cents to the U.S. dollar, from C$1.0022 yesterday.
Australian Dollar
The Australian dollar reached 92.59 U.S. cents, the strongest level since Jan. 19, after the central bank raised the main interest rate to 4.25 percent, its fifth rate increase in six meetings. The bank said borrowing costs need to be “closer to average” amid an expanding domestic economy and growth in Asia.
“The market was 50-50 on whether they would raise interest rates,” said Amelia Bourdeau, a currency strategist in Stamford, Connecticut, at UBS AG. “The statement was hawkish, and that led Australian dollar to do well.”
The currency pared gains to trade at 92.45 U.S. cents, up 0.3 percent from 92.14 cents yesterday.
Yuan forwards touched the strongest level in 11 weeks on speculation Treasury Secretary Timothy F. Geithner’s decision to delay a report on global foreign-exchange policies will make China more willing to let the yuan resume appreciation. Twelve- month non-deliverable forwards reached 6.6145 per dollar, the strongest since Jan. 20, before trading at 6.6335.
Colombian Peso
Colombia’s peso was little changed versus the greenback as Bank of America Corp. and RBS Greenwich Capital Markets predicted the central bank will step up dollar purchases to bolster exports and revive economic growth.
The two banks say the peso will drop 9 percent against the dollar by year-end, the biggest forecast decline among analyst estimates on 33 currencies tracked by Bloomberg, after surging 6.4 percent in the first quarter, the largest gain in emerging markets. The peso is down 0.7 percent since the central bank began buying $20 million a day in the market in March to curb a rally they say left the currency “misaligned.”
Colombia’s currency traded at 1,909.43 per dollar.
To contact the reporters on this story: Ben Levisohn in New York at blevisohn@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
Last Updated: April 6, 2010 11:27 EDT
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