Euro gains

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IOL world currency1 Graphic: Renjith Krishnan.

The euro gained against major currencies in Asian trade on Tuesday after the IMF said it was releasing 1.48 billion euros ($1.82 billion) in new funds to troubled Portugal.

The euro fetched $1.2286 in Asian trade compared to $1.2271 in New York late Monday. The European currency also rose against the yen, buying 96.92 yen from 96.40 yen.

The International Monetary Fund said Lisbon was on track to narrow its fiscal deficit under tough austerity measures required under the 78-billion-euro joint IMF-European Union rescue programme launched in May 2011.

Analysts said investors were looking to a two-day Congress testimony by US Fed chairman Ben Bernanke, which is scheduled to start later Tuesday.

“If there is no indication (for more easing) from him, stocks and long-term US Treasury yields will fall on disappointment,” Barclays Bank chief currency strategist Masafumi Yamamoto told Dow Jones Newswires.

“That indicates the dollar's risk is bigger on the downside.”

The greenback traded at 78.92 yen from 78.83 yen on Monday.

HiFX senior trader Stuart Ive told Dow Jones Newswires the Fed must be closer to making a decision on QE3, but he also said Bernanke will continue to restate previous comments at Congress.

“I think Bernanke will stick to his guns because it's not appropriate for him to announce QE3 while testifying and it has to be done by the FOMC (Federal Open Market Committee).” - Sapa-AFP

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