The euro rose the most this week against the greenback in more than a year as an easing in concern over Europe’s debt crisis spurred traders to end bets the shared shared currency would decline.
The euro appreciated for a second week versus the yen, the first back-to-back weekly gains since March, as increased demand at a Spanish bond sale and an agreement by EU leaders to disclose how banks perform on stress tests damped investor worries about the region’s financial system. The US dollar fell versus the yen as Japan’s ruling party announced a deficit-cutting plan and disappointing US data increased speculation the Federal Reserve would keep interest rates at a record low.
“The recent news out of Europe is reassuring,” said Camilla Sutton, a Bank of Nova Scotia currency strategist in Toronto. “Europe will release the results of stress tests and give the market the clarity it looked for. The US will be on hold for longer. That helped equities and boosted risk appetite.”
The euro rose 2.3 percent to US$1.2388 this week, the biggest gain since the five days ended May 22 last year, from US$1.2112 on June 11. It touched US$1.2417 on Friday, the highest level since May 28. Europe’s common currency rose 1.3 percent to ¥112.40, from ¥111 on June 11. The US dollar fell 1 percent to ¥90.71, from ¥91.65 a week ago.
The euro gained as futures traders decreased their bets that the currency will decline against the US dollar to the lowest level since April, figures from the Washington-based Commodity Futures Trading Commission show.
The pound this week gained the most versus the greenback since the week of April 2 ahead of the UK’s announcement of budget cuts on Tuesday, which may help it avoid the rising bond yields afflicting Spain and Portugal.
The pound climbed 1.9 percent to US$1.4824 this week from US$1.4552 on June 11. It fell 0.4 percent to £0.8359 per euro.
Asian currencies strengthened this week, led by South Korea’s won and the Philippine peso, as signs the global economic recovery will withstand Europe’s debt crisis boosted demand for riskier assets.
The won appreciated 3.6 percent to 1,202.65 per US dollar, according to data compiled by Bloomberg. The peso climbed 1.6 percent to 45.905 and the Indian rupee was 1.4 percent stronger at 46.1787.
The New Taiwan dollar completed its biggest weekly gain in nine months as an improving economy and the prospect of a trade deal with China spurred inflows.
GDP rose at the fastest pace in more than 30 years in the last quarter and China’s government said last Sunday a basic agreement had been reached with Taipei on goods, services and industries chosen for initial tariff cuts in the planned trade pact.
“Funds are flowing back as investors seek riskier assets,” said Tigr Cheng (程裕城), a strategist at Polaris Securities Co (寶來證券) in Taipei. “People have been upbeat about the economy.”
The NT dollar climbed 0.8 percent this week to NT$32.190 against the greenback, according to Taipei Forex Inc.
Elsewhere, the Malaysian ringgit gained 0.8 percent to 3.2500, the Singapore dollar strengthened 1.2 percent to S$1.3864 and the Indonesian rupiah appreciated 1.2 percent to 9,096. The Thai baht rose 0.2 percent to 32.40.
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