Worries about Europe drive euro to 11 1/2-month low

AP News
Posted: Dec 28, 2011 3:41 PM
Worries about Europe drive euro to 11 1/2-month low

Fears that Europe's debt crisis is far from over pushed the euro to an 11 1/2-month low against the dollar Wednesday.

The European Central Bank said Wednesday that the continent's banks parked a record $590.72 billion overnight at the bank, surpassing the previous record set only Monday. Those figures reveal that banks still distrust the financial system and would rather hold money at low interest rates at the ECB than lend to each other.

Even successful bond auctions in Italy failed to lift the euro against the dollar. Demand for Italian bonds was strong Wednesday, and the country was able to pay lower interest rates. That's a sign that investors are more confident about Italy's ability to repay its debt. The country recently passed a big package of budget-cutting measures.

The euro fell to $1.2941 in late trading Wednesday from $1.3069 late Tuesday. It fell to $1.2910 earlier, its lowest point since Jan. 10.

Trading was quieter than normal. Many traders go on vacation the week between Christmas and New Year's.

In other trading Wednesday, the British pound fell to $1.5455 from $1.5670 late Tuesday. The dollar rose to 77.91 Japanese yen from 77.85 Japanese yen, to 0.9424 Swiss franc from 0.9340 Swiss franc and to 1.0239 Canadian dollar from 1.0183 Canadian dollar.