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Euro under pressure in Asia on Cyprus, Italy worries

/ 11:39 AM March 28, 2013


TOKYO—The euro came under further selling pressure in Asia Thursday owing to concerns about Cyprus as it prepares to reopen its banks after the weekend bailout, while political uncertainty in Italy also weighed.

After dropping below $1.28 for the first time in four months on Wednesday, the euro fetched $1.2785 and 120.33 yen in Thursday morning Tokyo trade, compared with $1.2779 and 120.63 yen in New York a day earlier.

The greenback also weakened to 94.10 yen, from 94.40 yen ahead of a Bank of Japan meeting next week that is expected to see the launch of more aggressive easing by the central bank.


Cyprus confirmed banks will reopen on Thursday after a nearly two-week lockdown during which Nicosia agreed a bailout with its creditors that will see bank deposits above 100,000 euros hit by a one-off levy.

The lenders will open at 1000 GMT but only under draconian capital controls, the first of their kind in the 17-nation eurozone.

In Italy center-left leader Pier Luigi Bersani is struggling to establish a governing coalition a month after indecisive elections, raising concerns about stability in the country, which is enduring its longest recession in decades.

“Rising eurozone angst is front and center of the market radar, with a veritable smorgasbord of issues,” National Australia Bank said.

A “very poor” Italian bond auction hinted at limp market demand while weaker eurozone consumer and business confidence readings for March “are fully consistent with another quarter of negative growth”, it added.

Forex markets are eyeing German retail sales and unemployment data later in the day with a positive result likely to buoy the euro, analysts said.

In Japan, traders are eyeing the Bank of Japan’s policy meeting next week as its new governor Haruhiko Kuroda talks up his plans stoke the world’s third-largest economy and reverse years of falling prices.

His comments have stoked speculation that the BoJ will launch a new wave of aggressive policy measures.


“It is a near certainty that at least one of the two Bank of Japan board meetings in April will result in a further loosening in monetary policy,” London-based Capital Economics said in a note.

“Unfortunately, the markets’ expectations of the new governor are so high that they will be almost impossible to meet, let alone beat, leaving the risks firmly skewed towards disappointment.”

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TAGS: Asia, Business, Cyprus, economy, Euro, Finance, Foreign Exchange, Italy
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