The euro has fallen to an 11-year low against the Japanese yen amid fears that debt problems in Spain are worsening.
The euro fell to 94.37 yen in Asian trade, its lowest level since November 2000.
On Friday, Spain’s Valencia region requested the central government for financial help from a new rescue fund.
That resulted in Madrid’s borrowing costs shooting up to levels regarded as unsustainable in the long run.
The yield on Spanish 10-year bonds shot up a quarter percentage point to 7.28% and Spain’s Ibex stock index tumbled almost 6%, its worst fall in two years.
Analysts said the developments in Spain had raised fears that the eurozone debt crisis was worsening and spreading to the region’s biggest economies.
“The fear now is that given its debt woes, Spain may eventually need a bailout from the International Monetary Fund or the eurozone’s rescue fund,” Justin Harper of IG Markets.
“That is driving investors away from the euro to other relatively safer-haven assets.”
The euro also fell against the US dollar, slipping to $1.2122. It also dropped against the Australian and New Zealand currencies in Asian trade.
Asian stock markets also fell on Monday amid fears that the ongoing debt problems in eurozone will hurt the region’s growth.
Japan’s Nikkei 225 index fell 1.9%, South Korea’s Kospi dropped 1.8% and Australia’s ASX 200 index shed 1.7%.
The eurozone is a key market for Asian exports and there are concerns that demand from the region may decline in the near term.
At the same time, a weaker euro has also added to the woes of Asian exporters, as it makes their goods more expensive for buyers from the region.
Analysts said that investors were concerned that the crisis may spread even more.
“Just as the eurozone’s problems had appeared to calm down, uncertainty rears its head again,” said Masayuki Otani, chief market analyst at Securities Japan.
“It’s also not only in Spain where regional banks are in trouble, they’re also weak in Italy and other countries.”