October 4, 2011
The euro hit a near nine-month low against the dollar on Tuesday after European finance ministers debated making banks take bigger losses on Greek debt and delayed a vital aid payment to Athens until mid-November.
The single currency fell to $1.3145, its weakest since January as a slide in stocks and a collapse in the shares of Franco-Belgian banking group Dexia — which has hefty exposure to Greek debt — pushed investors into the safety of the world’s most liquid currency.
Investors see a growing possibility of a default in Athens as euro zone finance ministers look to force banks to take bigger losses on their Greek debt holdings, while the next aid tranche for the country has been delayed until mid-November.
The euro erased its losses to trade 0.2 percent higher on the day at $1.3198 on electronic trading platform EBS, but traders and analysts said the move is no more than a technical bounce with more losses ahead.