TOKYO: The euro moved towards a one-year low against the dollar in Asian trade Wednesday, amid doubts over Europe's ability to contain its sovereign debt crisis.
The unit, which fell below $1.31 in New York late Tuesday for the first time since January, bought $1.3031 in Tokyo afternoon trade.
That was slightly higher than $1.3006 on Tuesday before the unit recovered to $1.3033 in New York.
The euro was slightly weaker against the Japanese currency at 101.58 yen, while the dollar was flat, trading at 77.95 yen against 78.00 yen in New York.
Traders said the euro looked set to slide further as there is no quick fix for the continent's debt woes.
"It's a matter of time" before the euro falls through the $1.3000 mark, said Dai Sato, senior vice president of the foreign exchange division at Mizuho Corporate Bank.
"The question is how much further down will the euro go," he said. Sato added that the next target could be around $1.2860, the lowest level set in January this year.
The market turned risk-averse Tuesday after a report said Germany is opposed to raising the 500-billion-euro ($652 billion) lending limit for the planned European Stability Mechanism (ESM), said a senior dealer at a Japanese bank.
The ESM is to succeed the eurozone's temporary bailout fund, the European Financial Stability Facility, next year.
At a meeting of her ruling party on Tuesday, German Chancellor Angela Merkel signalled to lawmakers that Berlin remained opposed to any increase.
Germany's stance underscores a rift among some European leaders over boosting the fund's firepower and how best to tackle the eurozone's fiscal woes.
Euro selling was also propelled by the decision by the US Federal Reserve on Tuesday to leave interest rates near zero as it pointed to moderate improvement in an economy still fraught with problems, said the Japanese bank dealer.
The dollar was mostly higher against other Asian currencies.
It rose to Sg$1.3046 from Sg$1.3028 on Tuesday, to 1,156.00 South Korean won from 1,155.30, to 9,115.00 Indonesian rupiah from 9,110.00, and to 44.14 Philippine pesos from 43.86.
The dollar rose to 31.23 Thai baht from 31.15 while holding steady at Tw$30.25.
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