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Euro steady as markets weigh Cyprus bailout fears

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(Globalpost/GlobalPost)

The euro was steady in Asia Thursday as markets eye talks over a Cyprus bailout deal, while yen trade was dominated by speculation over the new Bank of Japan chief's first official press briefing.

The dollar fetched 95.94 yen in Tokyo midday trade, nearly flat against 95.98 yen in New York Wednesday afternoon, with the greenback held down after the US Federal Reserve stuck firmly to its monetary easing policies.

The euro strengthened at $1.2951 and 124.24 yen compared with $1.2937 and 124.17 yen in US trade.

Markets were keeping a close watch on Cyprus with talks continuing after lawmakers voted down a controversial plan to tax bank deposits as part of the debt-hit island's bailout package.

"The impression is that the worst-case scenario would be averted, although the whole problem also reminded us that the European debt crisis is far from being completely solved," said Daisaku Ueno, senior forex strategist at Mitsubishi UFJ Morgan Stanley.

National Australia Bank added that "fears of contagion have eased (for now)", supporting the euro after it took a drubbing on news of the bailout deal's terms.

Cypriot leaders are to decide Thursday on a newly drawn up plan aimed at securing a rescue package for the near-bankrupt eurozone member, after parliament rejected the controversial tax on savings.

In Japan, Haruhiko Kuroda, a finance veteran who advocates aggressive monetary easing to boost Japan's economy, took office as BoJ governor on Wednesday and was to hold a press conference later Thursday. Investors are looking to see if the BoJ announces policy measures before an April meeting.

"The key is whether he will talk about scheduling an interim board meeting in the coming days," Hideyuki Ishiguro, senior strategist at investment strategy at Okasan Securities, told Dow Jones Newswires.

The yen has declined in recent months under Prime Minister Shinzo Abe, who has pledged to turn around Japan's fortunes with big public spending and by pressuring the nation's central bank for more aggressive monetary policy.

While a weaker yen is good news for exporters, official data released Thursday showed the flip-side of the declining unit with Tokyo posting another trade deficit in February, this time of $8.1 billion, largely due to Japan's soaring energy costs.

Tokyo's power bills jumped after it turned off most of the country's nuclear reactors following the 2011 atomic crisis at Fukushima, turning to pricey fossil-fuel alternatives to plug the energy gap.

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http://www.globalpost.com/dispatch/news/afp/130321/euro-steady-markets-weigh-cyprus-bailout-fears