The euro fell to near the ¥97 line Monday morning in Tokyo after Standard & Poor’s downgraded the credit ratings of nine eurozone countries last week in connection with the regional debt crisis.
The unified currency fell to around ¥97.04 in the morning, setting a new 11-year low amid fears the U.S. rating agency’s downgrades Friday will exacerbate financial difficulties in the region, dealers said.
Finance Minister Jun Azumi said Monday the “rapid” fall of the euro’s value is creating concern because its slide against the yen is putting further pressure on exporters’ earnings.
“The move is a bit rapid and we are concerned,” Azumi told reporters.
Azumi declined comment on Friday’s downgrading by S&P of the credit ratings of nine of the 17 eurozone governments, including France, which lost its top AAA rating.
But he did say investor confidence in European sovereign debt has been eroded and the negative fallout has spread among European and other banks exposed to the debt.
Yuzo Sakai, manager of foreign-exchange promotion at Tokyo Forex & Ueda Harlow, said the unclear prospects of the Greek debt reduction talks being held between the government and creditors are also weighing on the euro.
“Negative news keeps coming out of Europe. If other rating agencies such as Moody’s follow S&P’s downgrades, the euro will face further selling.”
The dollar meanwhile held steady in the upper ¥76 range.
Traders said they were closely watching a short-term debt auction in France scheduled for later in the day.
Azumi, who met with U.S. Treasury Secretary Timothy Geithner last week, said Tokyo and Washington had confirmed the need for eurozone governments to try harder to establish a firewall to prevent the sovereign debt crisis from unsettling global financial markets and dragging down world economic growth.
Without such efforts, the crisis could become a serious “risk factor” for the global economy in 2012, Azumi said, stressing he wants European leaders to “make a response while sufficiently recognizing that.”
The Nikkei stock index lost 1.5 percent from Friday to end the morning at 8,371.40.