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Japan's exporters pummeled as euro tumbles to 10-year low vs. yen

(Xinhua)

08:39, December 30, 2011

TOKYO, Dec. 29 (Xinhua) -- The euro tumbled to its lowest level in more than 10 years against the yen during trading hours in Tokyo on Thursday and hit an 11-month low against the U.S. dollars, on concerns about an Italian bond auction.

The euro dropped 0.5 percent to 100.41 yen after falling to as low as 100.33, marking the lowest level since June 2001, sending export-related shares lower on concerns for firms' profit outlooks.

Against its U.S. counterpart, The 17-nation single European currency dropped 0.4 percent to 1.2896 U.S. dollars after falling to 1.2888 U.S. dollars, marking a fresh low since Jan. 10. The yen for its part appreciated 0.1 percent to 77.85 per dollar.

Local traders here said that during business hours in Tokyo, investors were keenly awaiting the results of Italy's bond auction later in the day which includes both three-and ten-year notes, with the treasury hoping to shift some 8.5 billion euros worth of debt in what will be the the final auction of 2011.

However, Japan's currency is set to strengthen further against the euro as Italy missed its 8.5 billion euro target, selling just 7.02 billion euros of debt, market players said on Thursday evening, adding that Japanese exporters would likely face further downward pressure on Friday, the last trading day of the year and particularly if Wall Street closes lower overnight.

Strategists also said that in addition to concerns over Italy's bond auction, investors also became increasingly anxious following news that the European Central Bank's (ECB) balance sheet has climbed to a record high, prompting traders to further bet on safe currency havens, particularly the yen, driving the Japanese currency higher.

"The surge in ECB lending has caused the euro to drop against the yen, fueling investors' concern on the region's debt issues," said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo.?

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