Euro Falls to Weakest Level Against Dollar in 14 Months as ECB Holds Rate.

Workers repair the Euro sign sculpture outside the European Central Bank (ECB) headquarters in Frankfurt last month. 

The euro slumped to its weakest level in almost 14 months against the dollar and depreciated versus the yen as the European Central Bank kept its main refinancing rate at a record low.
The pound slid against the greenback as Britons voted in an election that may fail to produce a parliamentary majority for the first time since 1974. The ECB may announce additional measures to contain Greece’s debt crisis, analysts said. Greece’s finance minister said the country doesn’t have the money to repay debt due this month.
“I prefer to go with the momentum to the downside for the euro,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “The potential for monetary measures from the ECB could be groundbreaking.”
Europe’s common currency fell 0.6 percent to $1.2736 at 7:58 a.m. in New York, from $1.2814 yesterday, after earlier depreciating to $1.2719, the weakest since March 2009. It slipped to 119.47 yen, from 120.22, and earlier reached 118.86 yen, the lowest level since February 2009.
The euro has lost 7.8 percent of its value this year, Bloomberg Correlation-Weighted Currency Indexes show. The dollar bought 93.82 yen, from 93.81 yen.

Forecast Cut:
Standard Bank Plc cut its forecast for the currency to $1.20 from $1.25 and said it may fall as low as $1.15 over the next few months as the region’s sovereign debt crisis deepens.
“We see no sign that this crisis is going to end,” Steven Barrow, head of Group of 10 currency research in London, wrote in a research note today.
Greece doesn’t have the money to pay bond redemptions that total 8.5 billion euros this month and that’s why the country needs an aid package, Finance Minister George Papaconstantinou said today in remarks to parliament in Athens. Greece obtained 110 billion euros in funding from the European Union and the International Monetary Fund in return for cost-cutting measures union groups have called “savage.”
The euro slumped yesterday after Moody’s Investors Service said it may cut Portugal’s credit rating and ECB council member Axel Weber said Greece’s fiscal crisis threatens “grave contagion effects” for other euro members.
Europe’s fiscal crisis could threaten banks in Portugal, Spain, Italy, Ireland and the U.K. as the risk of contagion grows, Moody’s said in a report today. “Each of these countries’ banking systems faces different challenges of different magnitudes, but warns that contagion risk could dilute these differences and impose very real, common threats on all of them,” Moody’s said in the report.

U.K. Election:
ECB policy makers’ decision to leave their main interest rate at 1 percent was anticipated by all 58 economists surveyed by Bloomberg say. President Jean-Claude Trichet holds a press conference at 1:30 p.m. in Lisbon to explain the decision.
The pound fell for a fifth day versus the dollar, slipping 0.1 percent to $1.5081.
Four polls released yesterday showed David Cameron’s Conservatives winning the popular vote and the most seats, ahead of Prime Minister Gordon Brown’s Labour Party and Nick Clegg’s Liberal Democrats, while falling short of a majority.

Kiwi Jumps:
The New Zealand dollar rose after a report showed the nation’s jobless rate unexpectedly fell the most since at least 1986.
The currency, known as the kiwi, surged after the nation’s jobless rate fell and central bank Governor Alan Bollard said the nation’s economy was “less fragile,” fueling speculation the central bank will lift interest rates from a record low. New Zealand’s unemployment rate plunged to 6 percent in the first quarter from 7.1 percent in the previous three months, the statistics bureau said today.
“Financial markets currently expect the Reserve Bank to begin raising the official cash rate around the middle of the year and continue to do this in small steps for some time,” Bollard said in an e-mailed statement, based on a speech to local government officials in Dunedin today. “This is broadly in line with our current views.”
New Zealand’s dollar climbed 1.1 percent to 72.53 U.S. cents, and was at 68.09 against the yen, a gain of 1.2 percent.