“The euro erased a gain versus the dollar after touching the highest level in more than a week on concern political wrangling about the deal to bail out Cyprus has undermined faith in Europe’s financial system.
The 17-nation currency weakened against most of its 16 major peers after the provisional agreement that would make Cyprus the fifth country to tap a rescue since the euro crisis began in 2009. The bailout accord will see Cyprus Popular Bank Pcl wound down, wiping out bondholders, and will impose losses on some depositors at Bank of Cyprus Plc. (BOCY)Japan’s currency weakened against all of its 16 major peers before central bank Governor Haruhiko Kuroda speaks to lawmakers tomorrow.
“What people are more worried about, which is really deterring people from going back into the euro zone in size, is the fact that a lot of trust has been broken,” Geoffrey Yu, a senior currency strategist at UBS AG in London, said in a telephone interview. “People are wary about the future of the euro at this point because of the precedents that have been established.”
The euro weakened 0.2 percent to $1.2964 as of 8:24 a.m. inNew York, after reaching $1.3048, the strongest level since March 15. Europe’s shared currency rose 0.2 percent to 123.03 yen, paring an advance of as much as 0.9 percent. Japan’s currency depreciated 0.5 percent to 94.92 per dollar.
