The euro halted a four-day decline against the dollar Monday morning, but was unable to take back much of its steep recent losses amid lingering concerns that Europe’s sovereign debt crisis is about to spiral out of hand.
The European Central Bank was said to be buying Portuguese bonds this morning, providing temporary relief after the interest rate premium on Lisbon’s sovereign debt rose sharply last week.
France and Germany are reportedly pressuring Portugal to seek financial aid from the EU and IMF, hoping to head off a crisis that may threaten the viability of the euro monetary union.
Greece and Ireland have already been rescued, but bond vigilantes continue to pressure Europe’s weakest members.
The euro dropped to a 4-month low of $1.2873 versus the dollar late last night in New York, and was very slightly improved at $1.2913 this morning.
The single currency lost 5 cents last week, losing ground on Friday even after a disappointing US jobs report.
The euro hit a monthly low of Y106.93 versus the yen, and was little changed at 107.14 in more recent deals. In 2010 the euro hit a 9-year low of 105.41.
As the euro has weakened, the Swiss franc has become a fashionable asset. The euro was down to CHF 1.2530 against its safe haven rival, near a record low of CHF 1.24 set earlier this month.
In economic news, an indicator of euro area investor sentiment rose to 10.6 in January from 9.7 in December, latest survey data from Sentix showed Monday. However, the reading was less than a score of 11.8 economists had forecast.