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Euro opens in Asian markets Wednesday at new four-year low

Wednesday, May 19th 2010 - 05:45 UTC
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Still many uncertainties about the future of the European currency Still many uncertainties about the future of the European currency

The Euro dropped to a new four-year low against the US dollar on Wednesday in Asian markets, changing hands at 1.2144 US dollars in early trade in Tokyo, amid persistent concerns over the European debt crisis.

The Euro had traded at 1.2162 in New York on Tuesday. The Euro had not fallen below 1.22 USD since April 2006.

Bearish sentiment towards the single European currency prevailed in Asia even after Euro zone finance ministers vowed to fix the region's finances while expressing concern at their plunging currency.

The decline is also attributed to Germany’s announced plans to ban naked short-selling of shares from midnight.

Traders fear that the austerity measures being put in place in many Euro zone countries will hit growth.

Despite the huge sums of money pledged in support for Euro zone countries, severe measures are still needed to cut budget deficits and debt.

The German government's ban will apply to the country's 10 most important financial institutions, and aims to stop the short-selling of euro government bonds as well as Euro government bonds.

Short-sellers usually borrow shares, sell them, then buy them back when the stock falls and return them to the lender, keeping the difference in price.

“Naked” short selling is when sellers do not even borrow the shares.

Categories: Economy, International.

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