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The euro slumped against most of its major counterparts as Portugal began debating a budget that may lead the government to fall and European leaders pushed back a decision on funding a regional bailout mechanism.
The 17-nation currency fell for a second day against the dollar before a Portuguese vote that may force the nation to an early election and bailout and reports the expansion of the European Union European Financial Stability Facility will not be decided until June.
The yen strengthened against most of its major counterparts as Luxembourg Prime Minister Jean-Claude Juncker said Europe, the U.S. and the Group of Seven are “ready” to act to curb the currency’s rise.
Demand for Japanese debt rose as radiation levels at Japan’s Fukushima Dai-Ichi nuclear power plant hampered efforts to repair reactors.
The yen rose against most major currencies even after Jean- Claude Juncker said the Japanese currency is “slowly moving in the wrong direction”. The G-7 nations intervened March 18 to bring the currency down from a postwar high.
Juncker also said March 21 his “personal guess” is that the EFSF would be decided in June and would increase guarantees. The decision won’t be made by the end of this week’s meeting of policy makers, Reuters reported citing a draft document.
“Portugal has been on the radar screen, but the statement that was most damaging is that the EFSF was put off to the end of June,” said Steven Englander at Citigroup Inc.. “Everything we heard and seen for the last three months was telling us that everything would be wrapped up this weekend and now it’s not.”
The pound fell against all its major counterparts after the Bank of England minutes showed policy makers voted 6-3 to keep rates steady on March 10.
Chancellor of the Exchequer George Osborne said the British economy will more grow more slowly this year than previously forecast.
The Office for Budget Responsibility predicts annual growth in 2011 of 1.7 percent, down from the 2.1 percent forecast in November, Osborne said.
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