The euro rose off its lowest point in a year on Friday as debt-ridden Greece asked the IMF and other eurozone countries to activate a financial rescue package worth more than US$50 billion.
Worries about European nations’ debt, particularly in Greece and now Portugal, have helped strengthen the dollar in recent months, pushing it up nearly 5 percent this year against the euro.
In late New York trading, the euro was quoted at US$1.3390 in New York versus US$1.3316 late Thursday. Before Greece requested that the aid plan be put into use, the euro had sunk as low as US$1.3202, its weakest point since April last year.
Analysts cautioned that the aid package would last Greece only into next year, and a multi-year program would likely be necessary.
“Relief for the [euro] will be a stop-and-start process,” Credit Suisse analysts said.
The German parliament still has to approve aid for Greece, and Portugal, too, is struggling with heavy debts.
Also on Friday, the closely watched Ifo survey of German business confidence rose in April for the second straight month, signaling strength in Europe’s biggest economy.
In other late trading Friday, the British pound slipped to US$1.5375 from US$1.5389 after a weak report on first-quarter GDP. The dollar fell to 1.0726 Swiss francs from 1.0768 francs, but rose to C$1.0005 from C$0.9993.
The dollar gained to ¥94.03 from ¥93.35.
ASIAN CURRENCIES
Meanwhile, India’s rupee and the New Taiwan (NT) dollar posted the biggest losses among Asian currencies this week on concern about Greece’s ability to tackle its deficit and measures by central banks to curb appreciation.
Weakness in regional currencies was tempered after the IMF reiterated that Asia will lead the global recovery this year, and said some countries should embrace stronger exchange rates.
India’s rupee fell 0.2 percent this week to 44.4350 per dollar in Mumbai, the biggest five-day loss since Feb. 5, according to data compiled by Bloomberg.
The NT dollar declined 0.2 percent to NT$31.46, retreating from a 20-month high, on suspected intervention from the central bank in late trading on Friday.
The NT dollar rallied earlier on Friday as overseas investors pumped US$127 million into local stocks. The government reported a seventh straight monthly increase in industrial output and Deputy Minister of Economic Affairs Lin Sheng-chung (林聖忠) said this year’s economic growth forecast may be raised.
“The central bank bought dollars,” said Joanna Tan, a regional economist at Forecast Singapore Pte. “They have been slightly more aggressive. They don’t want the Taiwan dollar to appreciate too fast. There are still foreign inflows.”
YUAN AND G20
Yuan forwards climbed this week on speculation officials from the G20 nations gathering in Washington will press China to resume appreciation in the currency.
Twelve-month non-deliverable yuan forwards were at 6.6108 per dollar, up 0.1 percent from last week. The contracts reflect bets the currency will strengthen 3.3 percent from the spot rate of 6.8275.
Elsewhere in Asia this week, Indonesia’s rupiah slipped 0.1 percent against the dollar to 9,013. The Philippine peso gained 0.2 percent to 44.325. The Singapore dollar and Malaysia’s ringgit were both little changed at S$1.3722 and 3.1930, respectively. Vietnam’s dong climbed 0.4 percent to 18,975.
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