The euro fell further against the dollar in three months on Sovereign-Debt Turmoil

The euro fell further against the dollar in three months on concern that so-called peripheral countries of Europe will have trouble paying its bondholders.

The dollar gained ground against all 16 most-traded counterparts this week as risk-averse investors seeking a refuge. The euro trimmed its loss of five yesterday on speculation the European Union is going to rescue Ireland, while the Group of 20 leaders at the summit agreed on the development of early warning indicators to tackle the global economic turmoil. U.S. Consumer prices rose 0.3 percent last month, a report next week may show.

"The focus is particularly on the periphery," said Aroop Chatterjee, a currency strategist at Barclays Plc in New York. "The problems of the euro area have returned to the forefront. There was little conviction in the buying euros to start, and now there is less of a reason."

The currency of 16 countries fell 2.4 percent to $ 1.3691, the biggest weekly loss since August 13. It is more than erase a 0.6 percent did so last week.

The yen rose 0.9 percent to 113.02 per euro, from 114.03 on 5 November. The Japanese currency fell for the second straight week against the dollar, falling 1.5 percent to 82.53 and touching a low of 82.80 yen a month on 10 November.

The euro weakened the extra yield investors demand to hold 10 years of Irish government bonds and Portuguese at Landmark German bonds widened to records and data that showed the largest economies in Europe are falling.

The yield difference, or spread, between the Irish 10-year securities and comparable dams of 652 basis points, or 6.52 percentage points, the highest in history. The spread of Portuguese notes 10 and levees rose to a record of 484 points.

Spain's economy

Spain's economy has stagnated, with a domestic product in the third quarter, unchanged from the last three months, state statistics show. German and French growth slowed in the third quarter, while the Dutch economy contracted.

the common European currency has lost 0.4 percent in the last week in a measurement of 10 pairs of developed countries, Bloomberg currency indexes weighted Correlation-show.

The dollar index, which IntercontinentalExchange Inc. uses to track the dollar against the currencies of six major U.S. trading partners, touched a five-week high of 78,479 as issues of European sovereign debt overshadowed plan Federal Reserve to inject more money into the U.S. financial system, degrading the dollar. The central bank said on November 3 will buy $ 600 billion in Treasury bills through June, under the quantitative easing to stimulate inflation and employment.

Once again, the issues of debt

"The debt issuance in the euro zone have emerged in recent days, and it seems the market is focusing on that more," said Fabian Eliasson, head of sales of U.S. currency Mizuho Financial Group Inc. in New York. "It seems they are only able to focus on one thing at a time."

The Australian, New Zealand and Canadian dollars, currencies linked to global growth, fell on speculation that China may raise interest rates to curb inflation. The data showed that China's consumer prices rose 4.4 percent in October, the fastest pace in two years.

The Aussie fell 3.1 percent from a week ago, the most since July, at 98.47 U.S. cents, while the Canadian dollar fell 1.2 percent to C $ 1.0123 and the currency New Zealand fell 2.8 percent to 77.33 U.S. cents.

500 of Standard & Poor's fell for the first time in six weeks, retreating by 2.2 percent. Crude oil for December delivery fell 2.3 percent to $ 84.88 a barrel in New York, after hitting a two-year $ 88.63.

Capital flows

G-20 agreed at their summit in Seoul that emerging market nations face a wave of capital flows can take regulatory action to address, providing coverage to limit currency fluctuations and stem asset bubbles.

Consensus weak around the G-20 means that Asian central banks will continue to actively buy and hold dollars, "said Stephen Gallo, head of research at market exchange Schneider London.

The summit also produced an agreement to develop early warning indicators to address current account imbalances that the risk sustained turbulent global economy. Finance ministers will work next year on a set of "indicative guidelines," a joint statement.

The meeting was marked by clashes over whether the Chinese and U.S. policies were more to blame for the economic imbalances that threaten the global recovery. President Barack Obama attacked China's policy of undervaluing its currency. China aimed to the quantitative easing by the Fed, saying it posed risks to financial stability.

Crackdown 'hot money'

The State Administration of Foreign Exchange, said Nov. 9 it would end speculation "hot money" flowing into the country, according to a statement on the website of the regulator. The agency "strictly" punishing banks that violate foreign exchange regulations, the statement said.

The yuan gained 0.3 percent in the week to 6.6383 per dollar. The People's Bank of China set the rate of the reference currency for trading in the 6.6239 yesterday, the strongest since a peg ended in July 2005.

"The Chinese talk about the internationalization of the renminbi," strategists led by David Bloom, global head of currency at HSBC Holdings Plc in London, wrote in a report. "The world economy is gradually moving from a redbacks greenbacks."

Consumer prices in the U.S. increased 0.3 percent in October, according to the median forecast of 65 economists surveyed by Bloomberg News before the Labor Department has data on 17 November. The consumer price index increased 0.1 percent in September.