Frankfurt (dpa) – The euro dipped Thursday to a 15-month low on foreign exchange markets, changing hands in Frankfurt for 1.2858 dollars during the early afternoon. Analysts said the fall reflected fears that Italy's bond issues may be faltering, but cautioned that trading volumes in the quiet week between Christmas and New Year were so low that even minor changes in sentiment could cause very large fluctuations in rates. The day's nadir was the lowest since September 2010. The currency was trading a shade higher, at 1.2890 dollars, later in the afternoon. On Wednesday, the European Central Bank reference rate for the single currency had been 1.3074 dollars. Markets were closely watching interest rates on Italian government bonds, which fell for a second day running as the country's treasury raised around 7 billion euros (9 billion dollars) in four bond auctions. However, demand was not high enough for the auctions to raise the stated maximum of 8.5 billion euros, analysts in Frankfurt said. The fall in yields was also less impressive than many in the market had been expecting. In the most closely-watched auction, Italy raised 2.5 billion euros from 10-year bonds at an average yield of 6.98 per cent – lower than the 7.56 per cent it had to pay at an equivalent auction last month. Overnight deposits by commercial banks at the European Central Bank (ECB), meanwhile, receded to 436 billion euros after hitting a record peak the previous day, but remained at an unusually high level. Money parked at the ECB is an indicator of nervousness about lending to other banks. On Wednesday, the deposits rose to 452 billion euros, the ECB said. BM ShortURL: http://goo.gl/jU1Ej Tags: Currency, Euro, Falling Section: Business, Europe
