Euro dives on Europe worries

[1]

The euro fell against the dollar in Asian trade on Wednesday amid fears France faces a credit downgrade and after a Greek official warned the country was close to running out of cash, analysts said.

The euro slipped to $1.3463 in afternoon trade compared with $1.3518 on Wall Street late Tuesday, while the European currency traded at 103.72 yen from 103.71 yen. The greenback was at 77.03 yen from 76.97 yen.

Japan's financial markets are closed for a holiday. Traders were fleeing the euro into the safe-haven dollar after a Greek government official was quoted as saying Athens would run out of money in less than three weeks, analysts said.

"A senior Greek government official said that they have enough money for another 20 days," said Shawn Lim, a forex dealer with Phillip Futures in Singapore.

The official also warned that Athens would default should its politicians stonewall an eight billion euro loan tranche from the European Union by refusing to back agreed reforms.

This, together with a warning by Moody's that France's AAA credit rating was in danger, slowing growth and the eurozone crisis 'are playing down the euro at the moment,' he told AFP.

The head of the agency that manages France's government debt on Tuesday acknowledged that the country was 'not in the best position' compared with other eurozone countries with the top credit rating.

As the turmoil in Greece threatens other eurozone countries, France is fighting desperately to retain its credit status, slashing spending and tightening up on tax revenues in an effort to stabilise strained public finances.

Joerg Zeuner, chief economist for Liechtenstein's VP Bank, said Wednesday the euro will remain volatile against the dollar in the near term, but actions by the European Central Bank (ECB) were keeping it from slipping further.

"Typically what we saw over the last couple of weeks, or months, is going to continue... the euro will fluctuate against the US dollar somewhere between 1.30 and 1.40 depending on what the sentiment is," he said at a media briefing in Singapore.

The US dollar was mostly stronger against Asian currencies. It rose to 1,150.89 South Korean won from 1,146.90 on Tuesday, to Sg$1.3051 from Sg$1.3017, to 31.28 Thai baht from 31.18 and to Tw$30.37 from Tw$30.31.

However, it fell to 9,050.00 Indonesian rupiah from 9,115.00 and to 43.25 Philippine pesos from 43.33.