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Euro tumbles after ECB’s Greek collateral decision

The euro sank Wednesday, extending losses after the European Central Bank revoked a waiver that had allowed Greek banks to use the country’s junk-rated sovereign debt as collateral for cheap loans .

The euro EURUSD, +0.75% changed hands at $1.1335 in late North American trade, down from $1.1482 late Tuesday. The shared currency had earlier surged as high as $1.1534 — it’s highest level since Jan. 22.

The shared currency extended a drop after the ECB said it would no longer accept Greek government bonds for collateral because it was unsure that Greece would successfully renegotiate its bailout program. Greek banks will be able to tap liquidity through the emergency liquidity assistance program, which carries a higher interest rate.

The move is seen as a warning shot by the ECB, which opposes calls by Greece’s new antiausterity government for a debt swap as it attempts to renegotiate its rescue plan.