Euro struggles in Asia over Greek debt fears

Euro struggles in Asia over Greek debt fears

Friday, February 20, 2015 6:56 am

The euro struggled in Asia on Friday ahead of Greece’s last-minute funding talks with its European creditors, while the dollar was supported by expectations of a US interest rate hike this year.

The common European currency bought $1.1363 and 135.10 yen in Tokyo afternoon trade, against $1.1365 and 135.18 yen in New York, and well down from $1.1415 and 135.49 yen earlier Thursday in Asia.

The dollar was at 118.89 yen from 118.94 yen in US trade.

Eyes are on Brussels, where finance ministers from the eurozone’s 19 members will consider Greece’s application for a loan extension without the painful austerity measures it says have hurt the economy.

Germany rejected the request for an extra six months of cash, fuelling fears Greece will run out soon after its current bailout finishes at the end of the month.

However, hopes of a breakthrough have increased after a Greek government source said German Chancellor Angela Merkel held talks with Greek Prime Minister Alexis Tsipras by telephone on Thursday in a “positive climate”.

National Australia Bank said there was nothing definitive at this stage but pointed to the “rather legalistic construction” of the Greek request letter.

It “seems to express a wish to comply with its existing conditions or at least work toward a solution”, the bank said in a note.

The dollar has recovered from losses that came after Federal Reserve meeting minutes suggested an interest rate hike could be put back, as a bigger-than-forecast decrease in jobless claims reinforced optimism that US economic growth is outpacing global peers.

Neil Jones, head of hedge fund sales at Mizuho Bank in London, said “a rate increase by the Fed may not be immediate, but 2015 is still a possibility”.

“Any dollar weakness may be temporary,” he told Bloomberg News.

The dollar was mixed against other Asia-Pacific currencies.

It strengthened to Tw$31.72 from Tw$31.63 on Thursday, to 1,112.23 South Korean won from 1,108.28 won, and to 12,873.00 Indonesian rupiah from 12,846.20 rupiah.

The greenback also rose to 32.57 Thai baht from 32.54 baht and to Sg$1.3594 from Sg$1.3583, while it weakened to 44.21 Philippine pesos from 44.25 pesos and to 62.25 Indian rupees from 62.34 rupees.

The Australian dollar bought 78.08 US cents compared with 78.01 cents, and the Chinese yuan edged up to 19.00 yen from 18.97 yen.

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