Euro slumps to decade low against the yen

The euro fell to a decade low versus the Japanese yen yesterday as concerns about the financing needs of indebted euro zone countries continued to weigh on the shared currency, though moves were exacerbated in holiday-thinned trade. The euro fell as low as 98.71 yen on EBS trading platform, its lowest since late 2000, extending falls seen on Friday when it broke below 100 yen to finish the year down around 8 per cent. It later recovered to 99.60 yen, with liquidity thin as Asian, British and US markets closed for New Year holidays. Versus the dollar, the euro was at $1.2941 (Dh4.75), less than a cent above its 2011 low of $1.2858 hit last week. Worries about sovereign debt levels and a lack of policy solutions to the region\'s two-year-old debt crisis were expected to push the euro lower in the coming weeks and months. However, the euro\'s slide may be limited by periodic short-covering rallies as investors unwind hefty bets against the currency, with Commodity Futures Trading Commission data on Friday showing short euro positions swelled to a record in the latest week. \"There\'s still a lot of pressure on the euro due to concerns about the refinancing needs of some Eurozone countries in the first quarter,\" said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen. However, he said the substantial number of short euro positions could limit the euro\'s falls, potentially enabling it to rebound back above $1.30 versus the dollar, especially if US ISM and jobs data this week point to an improving USeconomy. Nevertheless, in the absence of a comprehensive European policy response to the debt crisis, the euro could test its 2010 low of $1.1876 next year, some traders said. Policymakers marked the 10th anniversary on Sunday of the introduction of euro notes and coins by urging governments to save and consolidate to overcome their debt crises, while warning 2012 would be harder than 2011.