Euro falls on EU uncertainly

The euro lost another 0.6 percent in relation to the US dollar on Wednesday to $1.2234, an 8-month low, as talk began to circulate that the European Monetary Union might be headed for a breakup.

Rumors also circulated that the German Bundestag has commissioned a report exploring the repercussions a country wishing to leave the EMU might face. While the German finance ministry called the report “absurd”, the rumors still affected currency values.

The euro also fell to a 9-month low in relation to the yen, to ¥132.59, a decline of 0.7 percent.

The shared currency also fell 0.3 percent against sterling to £0.6749, a four week low, and it hit a 2-year low against the Norwegian krone, falling 0.5 percent to NKr7.9053.

There were also rumors that there are plans to devalue the Moroccan dirham by as much as 15 percent to deal with its strength against the euro.

Most analysts believe that a breakup of the eurozone is a slim possibility at best, but they also think that it would be irresponsible to completely ignore the possibility. One analyst put the possibility of a breakup at 5 percent or less.

Meanwhile, in other currencies, sterling lost 0.3 percent in relation to the dollar to $1.8111, a seven-month low. Sterling also fell 0.4 percent to ¥196.28 in relation to the yen. The Australian dollar lost 0.7 percent in relation to the US dollar to sit at a 7-month low of $0.7501.

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