The Euro Is Going Down; Now Trading Below $ 1,24 (Update)

The euro is going down like free beer and have Friday reached it’s lowest level against the dollar since October 2008, currently trading at USD 1,24080 after closing at 1,23690 in Europe on shrinking volume. Deutsche Bank CEO Josef Ackermann says it’s unlikely that Greece will repay all its debt.

“I would doubt that Greece over time will be in a position to come up with the economic potential to pay back what it owes.”

Josef Ackermann

The euro fell below 1,24 against the dollar in European trading Friday afternoon, closing at 1,23690 – the lowest level since October 27. 2008 when it touched down on USD 1,23331.

The charts shows clearly that investors are fleeing out of all euro related deals, both currency, stocks and oil drop in European trading Friday.

The 16-nation currency is headed for a fourth week of declines against its U.S. counterpart, Deutsche Bank Chief Executive Officer Josef Ackermann said in a German TV talk show last night that Greece will require “incredible efforts” to repay its debts and may not be able to do so in full.

Adding that Europe has “no other choose” than keep bailing out the troubled E.U. states, otherwise a total meltdown would be inevitable.

“I would doubt that Greece over time will be in a position to come up with the economic potential” to pay back what it owes, Ackermann said in an interview with ZDF television.

Greece needs to be stabilized, as a collapse of the country would most likely trigger a contagion of other countries and lead to “a form of meltdown,” he said in the interview aired late yesterday and posted on the German broadcaster’s website.

“While the European austerity measures are a good thing in the long term, they will be negative for the domestic economy and that makes the currency less attractive,” Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London says to Bloomberg News.

“The euro trend is still downward,” Jones adds.

Financial Times points out that investors are getting scared by two factors;  the prospect for economic growth in view of the austerity programmes, and the now prevailing assumption that the ECB is likely to keep lose monetary policies irrespective of inflationary developments.

Here’s today’s euro story – illustrated (charts updated at 7:30pm CET):

EUR/USD:

The chart below show the eur/usd over the last two years. The euro have not been traded at this level against the dollar since October 2008.

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EUR/JPY:

(intraday)

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EUR/GBP:

(intraday)


Europe’s currency has fallen 2.2 percent this week after the region’s policy makers crafted an unprecedented loan package of almost $1 trillion to combat the sovereign-debt crisis that’s threatening the currency.

The euro has lost 8.8 percent this year, according to Bloomberg Correlation-Weighted Indexes.

Former Federal Reserve Chairman Paul Volcker (82)  said in a speech in London yesterday that he’s concerned that the euro area may break.

“You have the great problem of a potential disintegration of the euro,” Volcker, said.

Related by the Econotwist:

Killing My CDS Softly

ECB Announces Bailout Program

Europe Is Cracking Up

Norway’s Central Bank Ready To Help E.U.

Bailout Euphoria Is Evaporating

Scandinavian Reactions To E.U. Measures: “We Are Not Safe”

Bank Funding Crunch Deepens as Swap Rates Soar

Europe To Fight Speculators With “Secret Plan”

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