* Cyprus has till Monday to raise money to secure a bailout
* Dollar, euro fall more than 1 percent versus yen
* BoJ's Kuroda offers no clues on an emergency meeting
By Wanfeng Zhou
NEW YORK, March 21 The euro fell broadly on
Thursday, hit by fears of a financial meltdown in Cyprus, while
the yen surged as renewed euro zone worries spurred investors to
sell riskier trades funded by the low-yielding Japanese
The euro zone is ready to discuss a new draft proposal from
Cyprus that it expects to receive soon, the bloc's finance
ministers said in a statement after a conference call to discuss
the crisis in the island nation.
Cyprus' parliament voted down a plan announced over the
weekend to impose taxes on citizens' savings as part of an
international bailout. Without the aid, the country would face a
collapse of its financial system that could push it out of the
euro currency zone. The European Union gave Cyprus till Monday
to raise the money needed to secure the bailout.
"While the situation remains unclear in Cyprus as to how the
country will obtain the necessary aid and under what conditions,
the euro is likely to remain under pressure," said Eric Viloria,
senior currency strategist at FOREX.com in New York.
The euro slid 0.3 percent to $1.2898, slightly above a
session low of $1.2879 and edging back towards a near
four-month trough of $1.2843 hit on Tuesday.
Near-term support lay around the 200-day moving average for
the euro against the dollar around $1.2877, with most investors
looking to sell into any bounce toward the $1.30 level.
Standard & Poor's cut the sovereign long-term foreign
currency credit rating on Cyprus deeper into junk status on
Thursday, lowering the rating to CCC from CCC-plus as the
country struggles with a banking crisis.
Data showing the euro zone's economic downturn deepened,
even before Cyprus' bailout debacle, added to worries about the
bloc's growth outlook and also pressured the single currency.
Germany's composite PMI fell in March, although it held
above the 50 line that separates growth from contraction. In
France, the bloc's second-biggest economy, it sank to a
"The uncertain situation in Cyprus and the dour euro zone
economic data are the key issues here and these are two reasons
not to be buying the euro at this time," said Greg Moore,
currency strategist at TD Securities in Toronto.
The euro also fell to a five-week low against the British
pound and was last down 0.7 percent at 85.01 pence.
Against the yen, the euro lost 1.5 percent to 122.29 yen
The dollar fell 1.1 percent to 94.93 yen, having hit
a session low of 94.56 yen, according to Reuters data. It's on
pace for the biggest daily drop since Feb. 25.
The yen tends to strengthen in times of market stress,
behaving like a safe-haven currency, as investors sell assets
like stocks and higher-yielding currencies and buy back the yen.
The prospect of further aggressive monetary easing in Japan has
made the yen a favorite funding currency for such trades.
"There's obviously some risk aversion based on the Cyprus
situation," said Fabian Eliasson, vice president of currency
sales at Mizuho Corporate Bank in New York.
New Bank of Japan Governor Haruhiko Kuroda vowed to take all
possible measures available to achieve its 2 percent inflation
goal in about two years. He also said the BoJ does not have to
rely on currency moves to escape deflation and offered little
insight on whether he will call for an early policy board
meeting ahead of the bank's next scheduled meeting on April 3-4.
BNP Paribas currency strategist Vassili Serebriakov said
Kuroda's comments were less dovish than markets had anticipated.
"The market has a very high bar for dovishness from the BoJ, so
when he said that the bank does not need to rely on a weak yen
to beat deflation, that kind of was a letdown."
Analysts said the latest bounce in the yen could attract
more sellers as market expectations for aggressive monetary
easing by the BoJ remained intact.