The euro is weaker this morning, EUR/USD down at 1.2890 compared to a European close Monday around 1.3065, while EUR/JPY is at 117.70 from around 119.45. Risk aversion has been heightened overnight by a Nikkei report that Russian banks have asked the government for help in restructuring $400 bln of corporate foreign debt. The Russian Government has subsequently tried to pour cold water on the story, with spokesman Dmitry Peskov saying that the Government is not considering any plan to restructure corporate debt and is not in talks with foreign banks on the issue. Such is the parlous state of the Russian economy, and its’ banking system, this official denial doesn’t seem to have fully allayed fears.
The euro has also been undermined by dovish comments from ECB’s Axel Weber, who says the bank must continue to cut rates to counter the severe economic downturn.