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Posts Tagged ‘Euro’

Euro falls as Irish credit rating cut

In Uncategorized on December 20, 2010 at 6:27 am

TOKYO, Dec 20, 2010 (AFP) – The euro fell against other currencies in Asia on Monday on worries over the eurozone’s public finances after Moody’s slashed debt-stricken Ireland’s credit rating, analysts said.

The euro fell to 1.3154 from 1.3185 dollars in New York late Friday and to 110.35 yen from 110.78 yen. The dollar firmed to 84.00 yen from 83.94 yen.

Moody’s Investors Service on Friday cut its credit rating on Ireland by five notches, citing uncertainties over the country’s economy and public finances.

It came a day after European leaders agreed at a Brussels summit to set up a permanent financial stability mechanism from 2013 to shore up the euro amid fears Portugal and Spain may need bailouts after Irish and Greek rescues.

But there was no decision to increase its size beyond the bloc’s temporary 750 billion euro fund or allow it to purchase government bonds, or introduce a common European bond, John Kyriakopoulos of National Australian Bank noted.

“As such, European sovereign debt concerns are likely to linger into the New Year,” he wrote in a note, adding investors needed to watch European bank funding costs.

The failure to enlarge the size of the bailout fund was disappointing “given worries that it is insufficient to cope with the bailout of larger eurozone countries if needed,” said Frances Cheung at Credit Agricole CIB.

The South Korean won fell after South Korea ordered civilians on five border islands to take shelter ahead of a live-fire exercise Monday despite North Korean threats of deadly retaliation.

The unit extended its early losses against the safe-haven US dollar, which in morning trade fetched 1,167.40 won from 1,163.40 earlier.

But the news hardly moved dollar-yen rates with the yen also drawing buying as a safe currency, analysts said.

Source: SGGP

Europe throws euro fresh lifeline

In Uncategorized on December 17, 2010 at 8:56 am

BRUSSELS, Dec 17, 2010 (AFP) – European leaders signalled a willingness to grant troubled nations a fresh financial lifeline, ring-fencing the euro in a bid to fend off market vultures once and for all.

With Portugal and even Spain predicted to need aid like Greece and Ireland, European Union president Herman Van Rompuy said they were “ready to do whatever is required to ensure the financial stability of the eurozone.”

Portuguese Prime Minister Jose Socrates (L) and French President Nicolas Sarkozy talk prior to a working session of the EU summit at the European Council headquarters in Brussels. AFP

While a Brussels summit stopped short of meeting myriad calls for a new injection of rescue funding, the “political will” of the 27 national leaders is “beyond doubt,” Van Rompuy insisted.

“It’s their way of saying they are prepared to put lots of money on the table,” explained a senior EU diplomat.

Belgian Prime Minister Yves Leterme also spoke of “a joint will to put in as much money as needed,” while a French governmental source said Paris certainly “is absolutely inclined to increase the size of the fund as much as necessary,” in a significant change of mood.

The moment had not yet come to talk of specific figures, with Ireland having tapped less than four percent of existing capacity put up by euro partners, but European Central Bank head Jean-Claude Trichet appeared less than excited.

After shelling out more than 72 billion euros since May on iffy eurozone bonds, Trichet said pointedly: “I relayed my messages.”

He has recently agitated for governments to take back the initiative after heavy criticism they were being enslaved by markets — echoed on Thursday by International Monetary Fund chief Dominique Strauss-Kahn.

A permanent emergency rescue fund will be established from mid-2013, to replace an existing trillion-dollar joint EU-IMF facility, with a rewrite of the EU rule-book ordered by 31 December 2012.

The latest EU stance is intended to draw a line under a year in which the bloc looked like being torn apart by wolves on international money markets after Greece secured a 110-billion-euro bailout in May.

Used to seeing trillions of dollars change hands in the blink of an eye, traders and analysts — less than impressed — simply mounted pressure on other weak points in the euro chain.

Nevertheless, the deal on the new permanent umbrella comes amid hopes the holiday season will offer respite similar to that leaders experienced during the World Cup.

The EU stressed that new loans and guarantees will only be made available if judged “indispensable” by peers, and as with Greece or Ireland, in exchange for painful cuts and other changes.

That tweak came at Germany’s insistence, although Europe’s paymaster made no discernible progress in a similar push for future bailouts to need unanimous backing — which many oppose as it would grant Berlin an absolute veto.

“Euro countries need to coordinate economic policy” more, Chancellor Angela Merkel said afterwards, describing that process as an “interesting but difficult task.”

Pending any fresh assault from Berlin, aid will be activated “by mutual agreement,” after choreographed legal manoeuvres by the 27 states over the next two years.

Thursday’s stance represents the birth pangs of shared cross-border governance 12 years after experts said the creation of the euro was flawed due to the absence of a central government to control economic policy.

However, a call to debate the introduction of E-bonds — pooled financial guarantees allowing each and every euro nation to borrow funds for national use at common rates — was left for another day.

Merkel insisted the plan “would not rid Europe of its weaknesses, it would simply transmit them across the board.” 

Source: SGGP

Euro holds firm after G20 summit

In Uncategorized on June 28, 2010 at 12:51 pm

TOKYO, June 28, 2010 (AFP) – The euro held steady against other major currencies in Asia on Monday after weekend talks between Group of 20 leaders in Toronto delivered no upset to markets, economists said.

The euro was at 1.2380 dollars in Tokyo afternoon trade, flat from New York late Friday, while edging up to 110.69 yen from 110.57 yen.

The dollar was trading at 89.40 yen, up from 89.20 yen in New York.

The leaders’ joint statement, released at the end of two days of talks, warned that “failure to implement consolidation where necessary would undermine confidence and hamper growth”, but signalled compromise on such moves.

“Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilise or reduce government debt-to-GDP ratios by 2016,” it promised.

The communique, thick with exemptions and caveats, was signed by leaders who “intended their statement not to affect anybody”, said Mizuho Corporate Bank market economist Daisuke Karakama.

“They achieved the goal of being neutral to markets — it’s a statement of little meaning,” he said. “There is nothing concrete in the statement,” he added, noting that it was unclear how compulsory the debt-cutting goals are.

A dealer at a major North American bank in Japan told Dow Jones Newswires the G20 outcome showed restraint in debt-cutting goals, easing some concern that austerity measures could drag on risk-sensitive assets such as the euro.

“Given all the worry about the financial trouble in Europe and elsewhere, the G20 outcome doesn’t set very strict guidelines for trimming debt,” the dealer said, forecasting a firmer single currency in the near term.

The G20 statement also called for “greater exchange rate flexibility in some emerging markets” but shied away from specifically naming China, which has been pressured to allow the yuan to strengthen to ease trade imbalances.

US President Barack Obama went further than the carefully worded joint statement, saying he expected Beijing to be “serious” about the policy announced a week ago allowing greater flexibility of its currency.

China on Monday set the strongest yuan exchange rate in years after the summit.

The People’s Bank of China said it set the central parity rate — the centre point of the currency’s allowed trading band — at 6.7890 to the dollar, a fraction of a percent stronger than Friday’s 6.7896.

The dollar was lower against other major Asian currencies, falling to 1.3844 Singapore dollars from 1.3958, to 46.26 Philippine pesos from 46.55 and to 1,200.55 South Korean won from 1,213.25.

The dollar declined to 32.35 Thai baht from 32.45, to 31.99 Taiwan dollars from 32.09 and to 9,027.50 Indonesian rupiah from 9,072.50.

Source: SGGP

Euro is a ‘credible, solid’ currency: Lagarde

In Uncategorized on June 26, 2010 at 12:41 pm

LONDON, June 26, 2010 (AFP) – French Finance Minister Christine Lagarde called the euro “a credible, solid” currency and expressed confidence that troubled eurozone member Greece will be able to cut its public debt.

(AFP file) French Finance Minister Christine Lagarde

Asked in an interview with the BBC whether the European currency faced a threat to its continued existence, Lagarde said: “I know that that’s some sort of an existential dream of some economists.

“They’re very pleased to drive those sorts of dark scenarios and my position is I don’t want to drive those dark scenarios.

“What I’m focused on is what is going to work so that the eurozone stays together, supports the euro together, because the euro is a credible, solid and good currency for all of us and it’s our public good,” she added.

She dismissed as “just a lot of rubbish” speculation about Greece’s ability to repay its debts within the next 18 months.

“The plan that we’ve put together for Greece is a five-year plan, with a three-year grace period when they pay back nothing and then there are 24 monthly instalments over the next two years,” Lagarde said

“So let’s not mess around with 18 months,” she said, adding that Greece was “currently delivering against its commitments”.

Greece has adopted austerity cuts to secure a 110-billion-euro (135-billion-dollar) bailout loan from the European Union and the International Monetary Fund and save itself from default.

It is struggling to reduce a debt of nearly 300 billion euros while mired in a deepening recession.

Lagarde also said there was “no difference, no crack” between France and Germany over how to deal with the financial crisis.

“We’re both driven by the two-fold objective to maintain growth and of cutting deficit and debts, and this is our joint commitment,” she said.

Asked whether Germany was doing enough in the crisis, she said, “Germany is doing everything it can at the moment.

“We can all do more and some can do more in cutting deficits and debts, some can do a little bit more in spending and consuming,” she added.

Europe has come under increasing pressure from the United States to focus on measures to stimulate and protect economic growth, rather than to rein in spending programmes put in place to combat the worst recession in decades.

But German Chancellor Angela Merkel, head of Europe’s largest economy, has led moves to slash spending after the eurozone debt crisis forced Berlin to stump up the lion’s share of cash for an unprecedented rescue mechanism.

Critics have said that the more than 80 billion euros (98 billion dollars) in savings announced by Merkel over the next four years, which mirror similar efforts in other European countries such as Britain, will hit growth.

Source: SGGP

Italy approves 24 billion euro austerity drive

In Uncategorized on May 26, 2010 at 1:22 pm

Euro crisis weighs on German consumer sentiment: GfK

In Uncategorized on May 26, 2010 at 1:21 pm

‘Euro not in danger’: French minister

In Uncategorized on May 21, 2010 at 9:14 am

Photo: AFP

PARIS, May 21, 2010 (AFP) – The euro is not in danger, with eurozone member states determined to defend the currency at any cost, French Budget Minister Francois Baroin said on Friday amid deep strains on financial markets.

“The euro is not in danger because there is a real determination on the part of the eurozone countries” to defend the currency, Baroin said.

The 16 eurozone members are “very determined that we will not return to the previous situation,” he said, referring to the time when states could devalue their currencies to help their economies but at the cost of lower living standards.

Asked about continued instability on the financial markets where the euro has been under intense pressure, Baroin said Europe would not abandon the single currency.

“We will do whatever it takes to save the (unit) because it belongs to us all, it is our economic tool, our tool for development, because it is the future as far as employment is concerned,” he said.

The euro and stock markets have been rocked by concerns a eurozone debt crisis sparked by massive debt and budget deficits in Greece could spread to other member states and so short circuit a tentative economic recovery.

Source: SGGP

Dollar surges to new four-year high against euro

In Uncategorized on May 19, 2010 at 5:03 am

The euro has fallen to a new four-year low against the dollar, fetching 1.2144 dollars in New York trading, as the European debt crisis led to new financial restrictions by Germany spooking markets.

Bearish sentiment on the euro prevailed even after eurozone finance ministers vowed to fix the region’s finances while expressing concern at their plunging currency.

“The sentiment is very fragile,” said Vassili Serebriakov, currency strategist at Wells Fargo Bank.

“There are probably 100 reasons to sell the euro right now — the ECB credibility is one issue, the growth concern is another issue, the lack of clear message from the EU different politicians in the euro zone is an issue, and the list goes on.”

A trader is seen at Germany’s stock exchange in Frankfurt.

Traders said the euro’s decline accelerated after Germany said it would issue new restrictions on bearish trading, also a reason for Wall Street’s plunge by more than 100 points Tuesday.

“The only possible explanation for the move was Germany’s decision to ban naked short selling and Venezuela‘s suspension of currency trading with plans to move to a trading ban,” said Kathy Lien, director of currency research at Global Forex Trading.

“Venezuela is because their concern about a rapidly depreciating currency is most likely shared by other central banks around the world,” she said.

Venezuela’s central bank said that from Wednesday it is to introduce currency exchange bands in a bid to shore up its sinking money against the dollar and tamp down on runaway inflation.

“Central banks and other policymakers are becoming very nervous about the volatility in the financial markets and have resorted to fighting individual fires,” Lien said.

Germany’s securities market regulator Tuesday slapped a ban on certain speculative trading practices as it tried to stamp down market volatility in trading in government bonds of the 16 eurozone members.

Naked short sales “will be banned from midnight” for certain securities, a finance ministry spokesman told AFP in Berlin.

“The extraordinary volatility of the bonds of eurozone states” justified the ban on short selling, said the German market regulator, Bafin.

Given the current market conditions, with investors fearing possible contagion from the Greek debt crisis, “new excessive price variations could harm many on the financial markets and threaten the stability of the whole financial system,” said Bafin.

Naked short selling occurs when investors sell on the market a stock they don’t own and haven’t even borrowed, hoping to be able to buy it back later in the day at a lower price, thereby earning a profit.

Short selling has been repeatedly implicated in quick drops in markets, and its use has been limited or banned during the financial crisis on major exchanges.

Source: SGGP

Euro down, stocks weak as Europe meeting reaches no deal

In Uncategorized on May 18, 2010 at 9:06 am

HONG KONG, May 18, 2010 (AFP) – The euro was back under pressure on Tuesday and Asian markets were lacklustre as a eurozone debt crisis meeting failed to reach a deal on a trillion-dollar rescue fund.

Eyes were on Brussels where finance ministers of the 16 euro member states are trying to agree funding arrangements for the bailout for struggling economies, which many fear may not be enough to prevent a financial meltdown.

However, despite seven-hour negotiations on Monday they had still not finalised an agreement and said they would reconvene on Friday.

The news weighed on the euro, pushing it down to 1.2356 dollars in Tokyo morning trade from 1.2394 dollars in New York late Monday where it had slightly rebounded from its low of 1.2234 seen earlier in the day.

“The market simply doesn’t want to buy the euro. Confidence on the euro will not be restored” until the fiscal crisis in Greece and other countries is resolved, said Credit Suisse strategist Satoru Ogasawara.

Hong Kong rose 0.36 percent by the break.

Tokyo was flat, edging up 6.88 points to 10,242.64 after it hit an 11-week low Monday, helped by a slight pick-up in the euro against the yen, which helped exporters.

The European unit sank to 114.17 yen from 114.79 yen in New York but was higher than the 112.80 it was at on Monday.

Dealers are concerned that a default in Greece, which is mired in severe fiscal problems, would hit the financial system in the same way the collapse of Lehman Brothers did in 2008.

They are also worried that austerity measures brought in by several under-pressure countries to rein in their debt will crush European growth.

“The support package cobbled together by EU governments and the IMF may have averted a near-term sovereign debt crisis,” said Capital Economics in a research note.

“But it is conditional on massive fiscal consolidation (and structural reform) that may ultimately prove too much for the electorates of some member states in the eurozone to bear.

Shanghai fell 0.70 percent, extending losses on the euro crisis as well as persistent worries over further tightening measures in the mainland real estate sector, dealers said.

The key index lingered at more than a one-year low after plunging 5.07 percent in the previous session. The market has lost nearly 30 percent since the beginning of 2010.

“Investors don’t dare to hunt for bargains,” Zhang Qi, an analyst at Haitong Securities, told Dow Jones Newswires.

“The government didn’t stand up to say something comforting after the Shanghai market fell to a more than one-year low yesterday.”

Singapore was flat.

Gold opened at 1,225.00-1,226.00 US dollars an ounce in Hong Kong, down from Monday’s close of 1,234.00-1,235.00 dollars as dealers sell the precious metal after it hit record highs last week.

Oil was higher. New York’s main contract, light sweet crude for delivery in June, added 58 cents to 70.66 dollars a barrel. The contract briefly plumbed to 69.27 in the US Monday, its lowest level since October 5, 2009.

London’s Brent North Sea crude for July was up 78 cents at 75.88 dollars.

In other markets:

— Seoul closed 0.50 percent, or 8.27 points, lower at 1,643.24.

— Manila closed 0.74 percent, or 24.24 points, lower at 3,265.07.

Metropolitan Bank and Trust fell 0.87 percent to 57 pesos, but First Philippine Holdings bucked the trend, adding 0.90 percent to 56 pesos.

— Taipei fell 0.18 percent, or 13.42 points, to 7,585.30.

United Microelectronics Corp was 1.35 percent lower to 14.7 Taiwan dollars while Hon Hai was flat at 141.0.

— In Sydney, the benchmark S&P/ASX 200 ended up 0.08 percent at 4,470.7 after spending most of the day in negative territory.

— New Zealand shares closed 0.60 percent lower Tuesday as weak global sentiment continued to weigh on investors.

The benchmark NZX-50 index fell 19.07 points to 3,151.68.

“Global concerns are weighing on the market still,” said Craigs Investment Partners senior dealer Bryon Burke.

Infrastructure investor Infratil fell a cent to 1.67 dollars despite turning around its results in the year to March to post a 29 million dollar (20 million US) net profit following the previous year’s 191 million dollar loss.

Wellington fell 0.60 percent, or 19.07 points, to 3,151.68.

Telecom ended unchanged at 2.07 New Zealand dollars, discount retailer The Warehouse fell 2.2 percent to 3.49 and Kiwi Income Property fell 1.0 percent to 96 cents.

Source: SGGP

Euro plunges to four-year low as debt fears weigh

In Uncategorized on May 17, 2010 at 8:59 am

TOKYO (AFP) – The euro plunged to a four-year low in volatile Tokyo trade Monday as fears about eurozone debt continued to hammer the single currency and regional stock markets.

Sentiment remained fragile despite an EU-IMF rescue package worth almost a trillion dollars designed to prevent the Greek crisis from spreading, as fears grew that the single currency is at risk of collapse.

People pass in front of an electric price index in Tokyo. AFP photo

The euro fell to as low as 1.2243 dollars in Tokyo trade — its lowest since April 2006 — from 1.2358 in New York Friday. It later recovered slightly to 1.2277 in afternoon trade.

Tokyo shares dived 2.17 percent, or 226.75 points, to close at 10,235.76, while Shanghai closed down 5.07 percent, or 136.70 points, at 2,559.93 and Sydney plunged 3.12 percent, or 143.9 points, to 4,467.2. Hong Kong dived 2.48 percent by the break.

The eurozone rescue package was initially greeted with optimism but has since failed to reassure sliding markets, with Europe’s growth prospects stymied by belt-tightening measures announced by Spain, Portugal, Italy, and France.

“Concerns that severe fiscal austerity in the eurozone will crush growth in the region continue to weigh” on the euro, said John Kyriakopoulos of National Australia Bank in Sydney.

“Investors are questioning if tightening fiscal spending really is the right thing to do because it would have a negative impact on the economy,” said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp.

“The entire economic outlook is becoming increasingly grim.”

There was some support from figures showing Japanese machinery orders, considered a leading indicator of corporate Japan’s appetite for spending, rose a better-than-expected 5.4 percent in March from the month before.

Regional markets followed European and Wall Street stocks lower. On Friday the Dow dropped 1.51 percent on escalating fears for the health of the eurozone.

“While a financial safety net is in place (in the eurozone), that doesn’t remove the considerable economic concerns that burden that region,” Jamie Spiteri, head of trading at Shaw Stockbroking in Sydney told Dow Jones Newswires.

Stocks in Japanese exporters extended losses, with their overseas profits threatened by the euro’s weakness. Sony was down 4.50 percent and Kyocera lost 2.87 percent.

“The market has no confidence in the euro,” Mizuho Corporate Bank market economist Daisuke Karakama said, noting the single currency was lower even though there was no fresh news to drive it down.

Gold has soared to record peaks as investors exit the single currency in favour of safe haven investments, with the precious metal opening at 1,237.00 US dollars in Hong Kong, down from Friday’s record high of 1,249.40 dollars.

The debt crisis began as Greece teetered towards default, triggering fears that other weak economies such as Portugal, Spain and Italy may be next.

Worries that a possible debt default by Greece could hit the world’s financial system in the same way the collapse of Lehman Brothers did two years ago have sent shares and the euro plunging.

IMF chief Dominique Strauss-Kahn said Sunday that European nations had taken too long to respond to the Greek crisis.

Athens is now paying a painful price for its past overspending with the government forced to slash civil servant pay and pensions while raising taxes as a condition for the 110-billion-euro EU-IMF bailout.

The IMF and EU agreed the Greek bailout only at the beginning of May, and a week later were forced to put together the trillion-dollar euro rescue plan as investors continued to dump the currency and European shares.

Greek Prime Minister George Papandreou Sunday raised the possibility of taking legal action against US banks, saying they bear “great responsibility” for Greece’s debt crisis, according to a transcript of an interview provided by CNN.

Thai shares were 2.5 percent lower as political violence continued to paralyse the capital with almost 30 people killed as authorities clashed with “Red Shirt” protesters.

Oil was lower. New York’s main contract, light sweet crude for delivery in June, tumbled 1.45 dollars to 70.16 dollars a barrel while Brent North Sea crude for July delivery slid 1.36 dollars to 76.57 dollars.

In other markets:

— Seoul closed 2.60 percent, or 44.12 points, lower at 1,651.51.

— Taipei ended 2.23 percent, or 173.41 points, lower at 7,598.72.

PC maker Acer dived 6.9 percent to a eight-and-a-half-month low of 75.20 Taiwan dollars, while Taiwan Semiconductor Manufacturing Company was off 3.3 percent at 59.20.

— Manila closed 1.23 percent, or 41.11 points lower, at 3,289.31.

Philippine Long Distance Telephone Co. fell 0.19 percent to 2,500 pesos while First Gen Corp. dropped 2.17 percent to 11.25 pesos.

But Metropolitan Bank and Trust Co. gained 1.77 percent to 57.50 pesos.

— New Zealand fell 0.64 percent, or 20.27 points, to 3,170.74.

Telecom shed 1.4 percent to 2.07 New Zealand dollars and construction company Fletcher Building ended down 0.2 percent at 8.16.

Source: SGGP