Euro Falls Against Dollar

The euro fell to its lowest level in more than two months against the dollar by 85 million euros (112 million) aid package for Ireland failed to halt the concern that Europe's crisis of sovereign debt deepens.

The single currency slipped against all of its 16 major counterparts. Finance leaders ended talks yesterday in Brussels to agree a future crisis management system is not automatically cuts the value of bond holdings as the Irish pack was secured. Irish opposition parties criticized the terms of the rescue plan led by the European Union and the International Monetary Fund, and raised the cost of insuring the debt of Spain and Portugal.

"The euro is more than following the same script over and over again here, the market just refuses to accept the stabilization mechanism of the EU," said Boris Schlossberg, director of currency research at GFT Forex online merchant in New York . "The currency markets are driven entirely by the credit markets, and until the credit markets in Europe showed some stabilization is difficult to imagine the euro to find a significant wealth."

The 16-nation currency slid 0.9 percent to $ 1.3117 at 8:59 am in New York, and fell before $ 1.3114, the weakest since Sept. 21. The euro fell 0.6 percent against the yen to 110.68 from 111.37 on Nov. 26. The Japanese currency has depreciated 0.2 percent to 84.23 per dollar, compared with 84.10 on November 26.

Credit Default Swaps

The cost of debt insurance in Spain and Portugal reached record levels, according to CMA. Prices of credit-default swaps in Portugal rose 40 basis points, or 0.40 percentage point, to 542, and those in Spain rose from 22.25 to 336, according to CMA.

Ireland said it would pay an average annual interest of 5.8 percent in the aid package, which is broken down into 45 million euros from European governments, 22.5 billion International Monetary Fund and 17.5 million euros cash reserves of Ireland and domestic pension funds.

European finance leaders also endorsed a Franco-German post-2013 rescues sovereign dilutes appeals German Chancellor Angela Merkel for investors to take losses and share the costs to taxpayers.

Irish politicians reacted angrily opposed to the bailout package. Michael Noonan, a spokesman for the funding for the main opposition party, Fine Gael, said the interest rate was "too high" and that "the government has cleaned up in the negotiations."

The agreement for Ireland focus shifts to Portugal, which last week approved cuts deeper into spending more than three decades with the aim to get back on the limits of EU deficit for the year 2012.

Monthly Gain

The dollar headed for its first monthly gain against the yen since April as concerns that military action in the Korean peninsula will intensify the demand supports the relative safety of U.S. currency.

South Korea has doubled its force of artillery in the disputed island of Yeonpyeong, who was hit by missiles launched from North Korea last week, and asked journalists to leave, Yonhap News. The North Koreans have installed anti-aircraft missiles in the area, he said.

The South Korean won rose against all 16 major counterparts, recovering from a nearly 11-week low against the dollar, as investors speculated exporters took advantage of a favorable exchange rate on repatriation of earnings.

The won rose 0.6 percent to 1,152.46 per dollar, the biggest gain in a week. 1172.50 touched on 24 November, the lowest since Sept. 9.

The dollar index, which tracks the dollar against the currencies of six major U.S. trading partners, including the euro and yen, rose as much as 0.5 percent to touch 80,793, the highest level since 21 September.

'Currency of choice "

"The dollar will be the currency of their choice as risk appetite remains somewhat under pressure due to problems with Korea remain front and center," said Jeremy Stretch, executive director of foreign exchange strategy at the Canadian Imperial Bank of Commerce in London.

The Australian dollar touched the lowest level in nearly eight weeks against the dollar as concern the military action in the Korean peninsula will intensify.

The Aussie fell 0.2 percent to 96.23 U.S. cents. Reached 95.85, the weakest since Oct. 5.

The Swiss franc rose against 14 of its 16 most-traded counterparts as investors sought refuge amid the concern of the debt crisis of Ireland spreading.

The franc strengthened 0.7 percent to 1.3182 per euro, from 1.3278 on 26 November. Appreciated by 0.2 percent to 1.0013 per dollar, from 1.0036 francs on 26 November.

The franc gained 7.9 percent on a measure of the currencies of 10 developed nations in the past six months, according to our indexes of correlation-weighted currencies, making it the best performance during that period.