Euro down in Asia on election jitters, Spain ratings cut

SINGAPORE: The euro lost ground against the dollar in Asia Monday as wary traders withdrew their money from Europe after Spain's ratings cut and ahead of elections in key European states, analysts said.

The single currency bought $1.3236 in early trade, down from $1.3258 on Friday. The euro also lost ground against the Japanese yen, falling to 106.25 yen from 106.61 yen in the same time frame.

The dollar was at 80.27 yen from 80.29 yen on Friday.

Japanese and Chinese markets are closed Monday for a public holiday.

Traders were evacuating the euro after Spain's credit ratings cut on Thursday roiled the region ahead of elections in France, Germany and Greece this coming Sunday, said Justin Harper, market strategist for IG Markets Singapore.

"There's still been that backdrop of the Spanish downgrading... I think with the Greek and the French elections, no one wants to put too big a bet on the euro on that," he told.

Therefore, "traders would much rather be buying the US dollar," Harper added.

Spain announced on Friday that its jobless rate spiked sharply to 24.44 percent in the first quarter of this year, pushing unemployment in the debt-straddled nation to its highest level since 1996.

Ratings agency Standard and Poor's on Thursday slashed Spain's credit rating two notches to BBB+ with a negative outlook and warned of recession this year and next which will make it even harder to meet its deficit-cutting targets.

French, German and Greek elections to take place on Sunday also added to market uncertainty as traders preferred to keep their money on the sidelines in case of unexpected outcomes.

Despite a slew of holidays scheduled in most Asian countries for the next four days, DBS Group Research said the coming week would be a hectic one due to the elections as well as other key meetings. (AFP)