The euro fell to its lowest level in ten years against the yen as the European trading session got underway and risk aversion pushed investors away from risk currencies and concerns grew over the euro zone debt crisis.
The safe haven Japanese currency as lifted as investors preferred to protect their assets until they received more details on any fresh efforts from European officials to tackle the euro zone debt crisis. For now, most prefer to liquidate any long positions on the pair.
Over the weekend there was news reports that the E.U. leaders were considering beefing up the European Financial Stability Fund and new measures to ring-fence debt-ridden Greece, Portugal and Ireland.
This initially boosted risk currencies but the rally was short lived because this plan is still only in the “discussion” stage and it may face some tough hurdles in order to be passed by all EU authorities.
Concerns of a Greek default were made worse when German deputy finance minister Joerg Asmussen suggested that Greece may not receive its next aid 8 billion euro aid trance next month. He said Greece will probably have to wait beyond a key meeting early next month for a decision on the urgently needed bailout.
There is talk international authorities were working on a plan towards a “managed default” for Greece some time around the next G20 meeting in Paris in November.