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Euro Reaches Five-Month Low

Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
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Euro Reaches Five-Month Low

Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters
Common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February - Reuters

The euro fell to its lowest level this year as the European Central Bank looks set to cut interest rates before the Federal Reserve, fueling market discussion of just how much further it could fall.

The common currency dropped nearly 1% to $1.0631 on Friday, breaching the previous low of the year set in February and reaching the weakest in five months. It’s headed for a 2% weekly decline, which would be the worst since late 2022, according to Bloomberg.

The selloff, which follows the ECB’s clearest signal yet rate cuts are looming, is fueling talk among strategists that the euro can fall further to $1.05 by mid-year and even reach parity if the Fed stays on hold this year.

Banks including Bank of America Corp. ING Bank NV and Germany’s LBBW have already warned on the risk.

Adding to pressure on Friday were reports that Israel is bracing for a possible attack from Iran, which boosted demand for the safe-haven dollar.

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Washington Urges Israel to Extend Cooperation with Palestinian Banks

A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
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Washington Urges Israel to Extend Cooperation with Palestinian Banks

A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)

The United States on Thursday called on Israel to extend its cooperation with Palestinian banks for another year, to avoid blocking vital transactions in the occupied West Bank.

"I am glad that Israel has allowed its banks to continue cooperating with Palestinian banks, but I remain convinced that a one-year extension of the waiver to facilitate this cooperation is needed," US Treasury Secretary Janet Yellen said Thursday, on the sidelines of a meeting of G20 finance ministers in Rio de Janeiro.

In May, Israeli Finance Minister Bezalel Smotrich threatened to cut off a vital banking channel between Israel and the West Bank in response to three European countries recognizing the State of Palestine.

On June 30, however, Smotrich extended a waiver that allows cooperation between Israel's banking system and Palestinian banks in the occupied West Bank for four months, according to Israeli media, according to AFP.

The Times of Israel newspaper reported that the decision on the waiver was made at a cabinet meeting in a "move that saw Israel legalize several West Bank settlement outposts."

The waiver was due to expire at the end of June, and the extension permitted Israeli banks to process payments for salaries and services to the Palestinian Authority in shekels, averting a blow to a Palestinian economy already devastated by the war in Gaza.

The Israeli threat raised serious concerns in the United States, which said at the time it feared "a humanitarian crisis" if banking ties were cut.

According to Washington, these banking channels are key to nearly $8 billion of imports from Israel to the West Bank, including electricity, water, fuel and food.