Connect to share and comment

Euro firms in Asia but eurozone fears weigh

PlacardEnlarge
(Globalpost/GlobalPost)

The euro firmed in Asian trade Friday after Cyprus banks re-opened following a nearly two-week lockdown, while upbeat German data lent support to the embattled unit.

Cypriots stayed calm on Thursday as the banks opened their doors again, with the first capital controls of their kind in the 17-nation eurozone saving the country from a catastrophic bank run.

In Tokyo trade the single currency fetched $1.2828, a modest gain from $1.2814 in New York late Thursday, while it bought 120.69 yen from 120.64 yen.

The dollar was at 94.03 yen, from 94.12 yen in New York, ahead of a Bank of Japan meeting next week that is expected to see the launch of more aggressive easing by the central bank.

The euro's rebound was limited as analysts said the Cyprus crisis was still not over and as Italian politicians struggled to produce a governing coalition amid more strains on the economy.

Markets would also be looking to next week's meetings of the European Central Bank and Bank of England, dealers said.

Euro sentiment won a measure of support from better-than-expected German retail sales, which gained 0.4 percent in February from a month earlier.

The Bank of Japan's new chief, who has argued for a weaker currency, on Thursday called Japan's huge debt "abnormal" and warned Tokyo must avoid a possible plunge in confidence among bondholders.

"It is a near certainty that at least one of the two (BoJ) board meetings in April will result in some form of additional monetary easing," London-based Capital Economics said in a note.

But "markets' expectations of the new governor are so high that they will be almost impossible to meet, let alone beat, leaving the risks firmly skewed towards disappointment".

Japan is struggling with chronically anaemic growth while its ever-increasing debt mountain stands at more than twice the size of the economy.

It is the worst ratio among industrialised nations and one set to grow as a rapidly ageing population puts a strain on the social welfare system.

Weighing on yen sentiment were fresh industrial production data Friday that showed a 0.1 percent contraction in factory output in February from the previous month, underscoring weakness in the world's third-largest economy.

Figures on Thursday showed the US economy grew more strongly than initially thought in the last quarter of 2012 but was still moving at a sluggish 0.4 percent annual pace.

The greenback was mixed against other currencies Friday, easing to 1,112.14 South Korean won from 1,113.15 won a day earlier, to 54.28 Indian rupees from 54.38 rupees, to Sg$1.2397 from Sg$1.2433, and to Tw$29.86 from Tw$29.92.

The dollar firmed to 9,740 Indonesian rupiah from 9,710 rupiah, to 40.81 Philippine pesos from 40.79 pesos, and to 29.28 Thai baht from 29.26 baht.

The Australian dollar firmed to $1.0423 from $1.0422 while the Chinese yuan fetched 15.14 yen against 15.15 yen.

bur-pb-oh/ami

http://www.globalpost.com/dispatch/news/afp/130329/euro-firms-asia-eurozone-fears-weigh