The Euro continued to fall overnight in the Asian session, dropping to a new record low against the Swiss Franc and a four-month low against the US Dollar.
The Single Currency took a beating after new IMF head, Christine Lagarde, mentioned that the bailout fund was not in a position yet to discuss details with the European Union about a second joint bailout package for Greece.
“As regards a possible new program, in my view we’re not at the stage of discussing the conditions and terms and length and volume, and nothing should be taken for granted,” Lagarde, who took up the job on July 5, told reporters in Washington yesterday.
The IMF Managing Director attended an emergency meeting with European finance ministers on Monday and announced that they were considering using bond buybacks to deal with the Greek debt issue. Meanwhile, as the meeting was underway, Italy’s bond yields were surging to record highs. The new proposal came after talks with bondholders over a “voluntary” rollover of Greek debt ran into opposition from the ECB.
In an effort to prevent Italy and Spain from following the same fate as Greece, Portugal and Ireland, Euro zone finance ministers promised a more flexible rescue fund including cheaper loans and longer maturities. However, a deadline for implementing these new measures has not been set yet.
They said new measures would be announced “shortly”, but set no deadline.
Meanwhile, as Italy is dragged into the Euro zone debt crisis, the Euro continues its downfall. EURUSD opened the European session at 1.3959, over 70 pips lower than the Asian session open of 1.4029. The Euro hit a record low against the Swiss Franc, touching 1.1660 in Asian trading, and looks set to break past that low in European session.