The euro held on to its overnight gains in Asia Tuesday on the back of hopes for coordinated action to address the European debt crisis, even as analysts warned the crisis was far from over.
The euro was at $1.3535 in Tokyo afternoon trade, almost unchanged from New York late Monday. The European common currency changed hands at 103.35 yen, also flat from New York but up from the 10-year low below 102 yen it hit on Monday.
The dollar was rangebound at 76.35 yen compared with 76.42 yen.
“The euro is returning to normal after the recent selloff, which went too far,” said Kuniyuki Hirai, manager of the foreign exchange trading department at Bank of Tokyo-Mitsubishi UFJ.
The euro showed some resilience in New Yorkk after several days of growing alarm over the region's debt problems, helped by an expectations European policymakers would take concrete action to tackle the crisis.
Speculation that the European Central Bank will inject more liquidity into the banking system, or cut its key interest rate at its October policy-board meeting also helped improve sentiment toward the euro.
Broad gains in Asian shares Tuesday were another factor fuelling appetite for riskier assets.
“But no concrete decision has been made with regard to the eurozone debt crisis,” Hirai said. “It's all based on speculation.”
The consolidation around low levels “shows that the European debt crisis is a real problem and we don't have a real credible solution to how they are going to handle Greece and prevent contagion into the broader European financial system,” BNZ FX strategist Mike Burrowes said.
The dollar was lower against Asian currencies. It fell to 43.41
Philippine pesos from 43.77 on Monday and Tw$30.46 from 30.57, to 30.95 Thai baht from 31.07 and to Sg$1.2876 from Sg$1.3025.
It also dropped to 8,970.00 Indonesian rupiah from 9,050.00 and to 1,172.90 South Korean from 1,186.90. - Sapa-AFP