HONG KONG — The euro slumped Monday, and Asian stock markets sagged, amid nervousness over the euro zone debt crisis and a controversial bailout plan for Cyprus, one of the region’s smallest economies.
The plan, which would tap ordinary savers in Cyprus to share in the cost of the bailout, prompted anxious depositors to drain cash from automated teller machines in the country over the weekend, and raised concerns that bank runs could be set off elsewhere in the euro zone.
The euro reacted with a sharp fall against the dollar in Asian trading on Monday, sagging to $1.2904, down from $1.3074 at the close of play on Friday. The drop took the single European currency to its weakest level since late last year.
The Japanese yen, which tends to rise in times of uncertainly as it is seen as a relative safe haven, firmed to ¥94.66 per U.S. dollar, from about ¥96 on Friday.
Stock markets also fell sharply, with the Nikkei 225 in Tokyo and the Hang Seng in Hong Kong both down 2.1 percent by late morning.
In Australia, the S.P./ASX 200 index sagged 1.5 percent, and the Straits Times index in Singapore declined 0.8 percent.
Jeroen Dijsselbloem, the president of the group of euro area ministers, declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.
A scheduled parliamentary vote on the plan at an emergency meeting Sunday was postponed until Monday, to give the newly elected Cypriot president, Nicos Anastasiades, a chance to brief lawmakers.
Unfortunately, the issue is not as simple as whether the Cypriot government supports the bailout, analysts at DBS in Singapore commented in a research note on Monday.
The markets, they added, are worried that the plans to force ordinary depositors to share the cost of the bailout “may send the wrong message on the safety of bank deposits in other E.U. nations, just when light appeared to be emerging at the end of the long tunnel for the peripheral nations.”
Article source: http://www.nytimes.com/2013/03/19/business/global/asian-markets-drop-on-latest-euro-concerns.html?partner=rss&emc=rss
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