Euro firms against dollar in Asia | Inquirer Business

Euro firms against dollar in Asia

/ 04:17 PM June 14, 2011

TOKYO—The euro firmed against the dollar in Asia on Tuesday, with transactions dominated by position adjustments amid uncertainties over a bailout for debt-ridden Greece, dealers said.

The euro fetched $1.4432 in Tokyo morning trading, up from $1.4413 in New York late Monday. The European single currency gained to 115.84 yen from 115.54 yen.

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The dollar was rangebound at 80.27 yen, compared to 80.21 yen.

The euro was swayed by position adjustments after it shrugged off Standard & Poor’s announcement Monday to slash its credit rating for Greece by three notches to CCC.

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The rating agency said: “The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment.”

The euro “was bought back overnight as investors confirmed selling proved limited after S&P’s downgrade and the common currency’s downside was solid,” said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

“But this is not a stage to bid up the euro with no clear picture yet for how the Greek debt problem would be settled. The currency lacks a clear direction,” Kamei said.

Closely-watched Chinese data released earlier Tuesday showed that the country’s inflation rate hit its highest level since July 2008 as food prices soared following power shortages and crippling droughts in some regions.

The consumer price index rose 5.5 percent year-on-year in May, up from 5.3 percent in April and far above Beijing’s annual target of 4.0 percent. The rise matched a median estimate of analysts polled by Dow Jones.

The data triggered purchases of risk-sensitive currencies such as the euro and the Australian dollar against the yen.

Investors were cautious about a potential upside surprise earlier, which raised concerns over further tightening by Chinese authorities, Tomohiro Nishida, senior dealer at Chuo Mitsui Trust and Banking, told Dow Jones Newswires.

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The Bank of Japan on Tuesday left its key rate unchanged at between zero and 0.1 percent and said it would expand a programme of lending to companies in growth areas to support the economy.

The market is now awaiting US retail sales figures due out later in the global day. If the outcome comes weaker than expected, like many recent US economic indicators have been, dollar selling will likely be triggered, a dealer said.

The greenback was mostly lower against regional Asian currencies, falling to Sg$1.2325 from Sg$1.2382 on Monday, to 1,082.25 Korean won from 1,085.68 and to Tw$28.78 from Tw$28.82.

The US unit also eased to 43.33 Philippine pesos from 43.39 but rose to 8,537.50 Indonesian rupiah from 8,535.25 and was unchanged at 30.45 Thai baht.

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TAGS: Asia, dollar, Euro, Foreign Exchange Market, Forex
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