Euro steady despite Greek debt fears

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TOKYO: The euro held up on Tuesday despite the stalemate in bailout reform talks between Greece and its creditors, fuelling fears it will default on its debt repayments and possibly tumble out of the eurozone.

In Tokyo trading, the single currency bought $1.1280 and 139.38 yen, little changed from $1.1285 and 139.23 yen in New York.

The dollar rose to 123.55 yen from 123.38 yen.

After the collapse of talks at the weekend, both sides in the long-running Greek crisis were still unable Monday to break the deadlock, blaming each other for the impasse.


The European executive insisted creditors had made “major concessions” but the far-left government in Athens rejects what it calls their “irrational” demands.

Greece must agree on a deal by the end of the month, when it is due to make a huge debt repayment, or else it faces a default that could lead to it plunging out of the eurozone.

Ray Attrill, global co-head of forex strategy at National Australia Bank, said the euro may be winning support from investors who are betting that a deal will ultimately be reached.

“Whether [it is]complacency/belief an 11th [or 13th?]hour political deal will be struck on Greece [isn’t it always?] or that Greek default and potential Grexit will be a good thing for the rest of the eurozone, is hard to say,” Attrill said in a commentary.

But “neither side look set to blink, and the chances of a political breakthrough at Thursday’s Euro Group finance ministers meeting currently looks slim. We still see a big risk of higher volatility levels ahead”.

Investors are also keeping an eye on the Federal Reserve’s policy meeting, which wraps up Wednesday.

Markets are hoping for some clues about its timetable for an interest rate rise following a broadly upbeat string of data on the US economy in recent weeks.

Friday sees the Bank of Japan conclude its own meeting, which will be watched see if and when it will expand its stimulus program.

The dollar was mixed against other Asia-Pacific currencies.

It weakened to Sg$1.3463 from Sg$1.3480 on Monday, to 33.69 Thai baht from 33.75 baht, to 64.08 Indian rupees from 64.12 rupees, to Tw$30.90 from Tw$30.95.

The greenback rose to 1,118.35 South Korean won from 1,115.81 won, and to 13,346 Indonesian rupiah from 13,334 rupiah.

The Australian dollar rose to 77.65 US cents from 77.17 cents while the Chinese yuan bought 19.87 yen against 19.85 yen.

AFP

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