Euro tumbles to 22-month low on Greece fear - Xinhua

NEW YORK, May 25 (Xinhua) -- The euro dropped to its 22-month low against the U.S. dollar this week, dispirited by the likelihood of Greece's exit and debt crisis concerns.

The greenback gained from the weak euro and upbeat economic data from the housing market.

As the talks of a possible Greek exit from the euro zone intensified, the euro was struck heavily this week as investors feared that consequences could be devastating.

The Group of Eight meeting during the last weekend did not deliver much positive news for the market, and the informal meeting of EU leaders on Wednesday disappointed investors as no coordinated actions were raised.

A sell-off of the euro began on Tuesday and accelerated after former Greek Prime Minister Lucas Papademos said it "cannot be excluded that preparations are being made for the potential consequences of a Greek euro exit."

The shared currency tumbled to below 1.26 against the dollar on Wednesday, a level never seen since July 2010. On Thursday, the decline went even further as the European economic data showed that the economic growth weakened in the region.

A preliminary euro-zone purchasing managers' index for May showed that private sector activities across the region shrank at the fastest pace since mid-2009. Also, the German business climate index dropped from 109.9 in April to 106.9 in May, the lowest level in six months.

The weak economic data pressured on the euro as the shared currency dropped to a new 22-month low against the dollar on Thursday. The shared currency lost 2 percent against the dollar to 1.252 this week.

The dollar was boosted on the weak euro and rising risk-aversion appetite. Also, economic data, especially data from the housing market, gave investors confidence that the U.S. housing market is recovering.

The U.S. National Association of Realtors said that existing home sales increased 3.4 percent to an annual rate of 4.62 million units in April, the highest since May 2010.

Also, the Commerce Department reported that new home sales increased 3.3 percent in April from March to a seasonally adjusted annual rate of 343,000.

The dollar index gained 1.4 percent to 82.40 this week.

On other currencies, the British pound dropped against the dollar this week. The minutes of the Bank of England showed that members voted 8-1 to make no changes to the central bank's bond-buying program, with one member voting for an increase.

The British Office for National Statistics revised down its estimate of first-quarter gross domestic product to a minus 0.3 percent versus the previous quarter, providing another indication that the British economic growth needed to be bolstered.

The Japanese yen also retreated against the dollar this week as Japan's credit situation worsened. Rating agency Fitch on Tuesday cut Japan's long-term credit rating from AA to A+ and issued a negative outlook on the country's credit rating, saying that Japan's credit risk is growing as a result of high and rising public debt ratios.