Euro loses over Greek woes as austerity move hits block

ATHENS

An unpaid for five months private clinic nurse holds her unpaid electricity bill outside the ministry of health in Athens. AFP photo

Greece’s Court of Auditors has ruled that upcoming pension cuts, the elimination of Christmas, Easter and vacation bonuses, and decreases in the jobless allowances for seasonal workers are “unconstitutional,” fueling the euro’s fall against the U.S. dollar. Troubling outlooks for major Japanese companies have also helped the greenback rise.

The dollar was at 80.21 yen in Tokyo during afternoon trading on Nov. 2, up from 80.13 yen in New York late Nov. 1. The euro slipped to $1.2932 from $1.2940. By midafternoon London time, the euro was percent lower at $1.2855.

The Greek Court of Auditors, which vets Greek laws before they are submitted to Parliament, said planned measures such as increasing the retirement age by two years to 67 and cutting pensions by 5 to 10 percent could be against the constitution. It said cutting pensions for a fifth consecutive time since the country’s first bailout in May 2010 violated a string of constitutional provisions including the principles of individual dignity and equality before the law, Reuters reported.

The International Monetary Fund said on Nov. 1 that negotiations between Athens and international lenders for desperately-needed rescue funds were stuck, sending Greek stocks plunging 5 percent. News on Greece “may well vie with the U.S. elections in terms of market significance” next week according to the National Australia Bank, Agence France-Presse reported. The dollar also rose against the yen three days after the Bank of Japan (BoJ) took fresh easing steps that initially sparked the selling of dollars.

The National Australia Bank said it was a little surprised “to see dollar-yen trading back on an 80-yen handle this morning so soon after the post-BoJ meeting sell-off on Tuesday.” It said that “company-specific news may be at play” after major Japanese electronics makers unveiled dire business outlooks.

Japanese firms lose

Sharp nearly doubled its loss forecast to a record $5.6 billion on Nov. 1, a day after Panasonic said it would lose an eye-watering $9.6 billion in the year to March. Sony said it expected to lose $1 billion on its TV business this fiscal year.

“The impression of the Japanese authorities ‘fiddling while the economy burns’ is hard to escape, but dire company news may now be doing more to help the cause of a weaker yen than policy makers ever can,” the bank said in a note. The Group of 20 world powers will meet on Nov. 4 to tackle fears of a new global economic downturn and renew pressure on Europe to contain its stubborn debt crisis. G-20 finance ministers and central bank governors will hold two days of talks in Mexico City as the troubles in Greece continue to vex the eurozone and Spain keeps everyone guessing if it will request a bailout.