• Euro struggles in Asia on ECB chief’s comments

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    SINGAPORE: The euro struggled in Asian trade on Monday after being hammered late last week in response to comments from the European Central Bank (ECB) chief hinting at further stimulus measures to fend off deflation.

    The single currency was at 146.19 yen in afternoon trading, slightly up from the 145.91 yen recorded in late London trade Friday but well off the 147.81 yen in Asia earlier that day.

    It also tumbled to $1.2398 from $1.2405 in London and was sharply down from $1.2553 Friday in Tokyo. The dollar bought 117.91 yen against 117.63 yen late Friday.

    “Inflation remains the key variable for the euro,” banking group ANZ said in a note, adding that “there is little expectation in a change to deflationary pressures that will cap the topside” of the currency.

    ECB head Mario Draghi on Friday said at a banking congress that the central bank “will use all means available to us, within our mandate, to return inflation towards our objective — and without any undue delay”.

    Among the measures being considered are the large-scale purchase of government bonds — known as quantitative easing — similar to that undertaken by the Bank of Japan and recently wound down by the US Federal Reserve.

    The ECB is struggling to fight off deflation in the currency bloc, with inflation currently at just 0.4 percent, well below the bank’s target of 2.0 percent.

    Singapore’s United Overseas Bank (UOB) said it expects the euro to weaken further.

    “The unexpected sharp drop last Friday indicates that a temporary top is in place . . . the immediate pressure is on the downside and the current weakness could extend towards the strong support at 1.2290 before a rebound can be expected,” it said.

    ANZ also said the recession in Japan and Prime Minister Shinzo Abe’s call for a snap election would keep the yen under pressure, having already fallen to a more than seven-year low against the dollar.

    The dollar eased against most Asia-Pacific currencies.

    It fell to 44.94 Philippine pesos from 45.06 on Friday, to 32.786 Thai baht from 32.79, to 12,125 Indonesian rupiah from 12,138.90, to 61.7337 Indian rupee from 61.84, to 1,113.16 South Korean won from 1,113.76 and to Tw$30.9140 from Tw$30.92.

    The greenback advanced to Sg$1.2995 from Sg$1.2988.

    The Australian dollar gained at 86.87 US cents from 86.15 and the Chinese yuan fell to 19.2164 yen from 19.25.

    AFP

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