Euro turns up ahead of G7 conference

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IOL world currency3 Graphic: renjith krishnan

The euro rose against the dollar and yen in Asian trade on Tuesday as markets awaited talks on Europe's fiscal crisis and helping debt-hit Spain's avoid a meltdown.

The euro bought $1.2530 and 98.11 yen in Tokyo morning trade, up from $1.2494 and 97.89 yen in New York late Monday. The dollar was at 78.30 yen, slightly down from 78.36 yen.

Finance ministers of the Group of Seven economic powers were expected to hold a conference call later Tuesday, as worries mount that some of Spain's banks could collapse without direct aid.

“The G7 meeting tonight could come with some harsh words from outside of EU from nations dealing with their own economic pressures, and would like Europe to get to the point,” National Australia Bank said in a note.

“Markets want to give Europe the benefit of the doubt, so we may see this relief rally last until the next set of bad news.”

The bank added that there were “huge amounts of expectations” building ahead of the European Union's twice-yearly summit in late June.

Those talks will come after fresh elections in Greece, which are seen as likely to seal Athens' fate over its future in the eurozone - and turn the spotlight on Spain and Italy.

Markets were also waiting to see if Japanese authorities intervene to sell the yen, said Citibank Japan chief forex strategist Osamu Takashima.

Tokyo has warned that it may step into currency markets again to bring down the yen's surging value, as it did last year after the unit hit historic highs against the dollar.

“(But) the likelihood of yen-selling intervention is low in the immediate future,” Takashima said in a note.

“Rather, swelling yen-short positions on expectations for intervention could end up strengthening the yen if risk-averse conditions continue and those positions are unwound,” he said. - Sapa-AFP


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