Euro dips before eurozone finance meeting

January 17, 2011
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, LONDON, Jan 17, 2011 – The European single currency fell against the dollar on Monday in muted trade before a meeting of eurozone finance ministers and amid a public holiday in the United States, dealers said.

In London deals, the euro fell to 1.3254 dollars from 1.3382 dollars in New York late on Friday.

Against the Japanese currency, the greenback slipped to 82.69 from 82.94 on Friday.

The shared eurozone unit retreated on Monday after last week\’s upward march that was prompted by a series of successful debt auctions by Spain, Italy and Portugal, which in turn had eased worries about the eurozone debt crisis.

"The euro has marginally fallen against the dollar, snapping last week\’s five-day gain, again on concern (that) the region\’s debt crisis will continue to worsen, even as European finance ministers meet today to hammer out a new strategy to stem the contagion," said CurrenciesDirect analyst Philip Ryan.

Officials in Brussels gathering for the two-day meeting are expected to discuss increasing the European Financial Stability Facility, an emergency lending mechanism for fiscally troubled eurozone countries.

Debate raged in Europe on Monday over growing calls to beef up the rescue funds, as Germany clashed with Brussels ahead of the meeting.

European Commission president Jose Manuel Barroso has pressed European leaders to take a decision to reinforce the safety nets within two weeks but eurozone heavyweight Germany has resisted being rushed into it.

The market is also cautiously awaiting a meeting between US President Barack Obama and Chinese President Hu Jintao, following Hu\’s currency comments over the weekend.

"The current international currency system is the product of the past," Hu said Sunday in written answers to questions posed by The Wall Street Journal and the Washington Post.

His comments, ahead of a state visit to Washington on Wednesday, reflected continuing tensions over the dollar\’s role as the major reserve currency in the aftermath of the US financial crisis in 2008.

Highlighting the dollar\’s importance to global trade, Hu implicitly criticised the Federal Reserve\’s recent decision to pump 600 billion dollars into the US economy, a move blamed for weakening the dollar at the expense of other countries\’ exports.

US financial markets will remain closed on Monday in observance of the holiday for slain civil rights leader Martin Luther King.

In London on Monday, the euro changed hands at 1.3254 dollars against 1.3382 dollars late in New York on Friday, at 109.59 yen (110.96), 0.8350 pounds (0.8430) and 1.2818 Swiss francs (1.2889).

The dollar stood at 82.69 yen (82.94) and 0.9670 Swiss francs (0.9633).

The pound was at 1.5870 dollars (1.5866).

On the London Bullion Market, the price of gold eased to 1,359.90 dollars an ounce from 1,367 dollars late on Friday.

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