Dawn News

Euro rally fizzles in Asian trade

Euros — File Photo
Euros — File Photo

TOKYO: A euro rally fizzled in Asian trade Thursday after the beleaguered unit briefly rose on cautious optimism over the latest steps to battle Europe's debt crisis amid signs of further US stimulus.

The common currency bought $1.2139 and 94.93 yen in Tokyo afternoon trade, down from $1.2153 and 95.04 yen in New York late Wednesday.

The dollar changed hands at 78.17 yen against 78.10 yen in New York amid reports that the Federal Reserve may move on pumping more cash into the stuttering US economy.

The euro had won support Wednesday after Austrian central bank governor Ewald Nowotny, a member of the European Central Bank governing council, said an EU financial rescue fund might be granted a banking licence.

That would allow the fund, known as the European Stability Mechanism (ESM), to exchange bonds for ECB cash, bolstering its capacity without governments having to contribute additional funds.

“The bond markets have reacted quite buoyantly,” HiFX senior trader Stuart Ive told Dow Jones Newswires.

But the euro's gains lost steam in the absence of further details on the possible banking licence.

“We suspect the key for how FX behaves later today will be any follow-up comment from ECB officials on the question of a banking licence for the ESM,” National Australia Bank said in a note.

The bank noted that ECB president Mario Draghi had earlier said the license would violate an EU treaty.

“If it becomes clear he is not changing his tune, then Wednesday's rally is at serious risk of unravelling,” it said.

The dollar was lower against other Asia-Pacific currencies.

It fell to Sg$1.2563 from Sg$1.2610 on Wednesday, to 56.08 Indian rupees from 56.30 rupees, to 9,484.00 Indonesian rupiah from 9,498.00 rupiah and to Tw$30.15 from Tw$30.17.

The greenback also dropped to 1,147.25 South Korean won from 1,149.20 won, to 42.12 Philippine pesos from 42.13 pesos, and to 31.69 Thai baht from 31.78 baht.

The Australian dollar edged up to $1.0318 from $1.0237 while the Chinese yuan was almost flat at 12.23 yen.


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