LONDON (AFP) — The European single currency climbed against the dollar Thursday amid hopes that heavy interest rates cuts around the world would help stem a global financial crisis, dealers said.
In late morning London trading, the euro climbed to 1.3758 dollars from 1.3663 dollars in New York late on Wednesday.
The dollar rose to 101.34 yen from 99.42 yen on Wednesday, when it sank under the 100-yen barrier for the first time in seven months.
Hong Kong, South Korea and Taiwan all reduced borrowing costs Thursday, a day after central banks in the United States, Canada, Europe and China slashed their key interest rates in a bid to tackle an escalating economic crisis.
"The unprecedented coordination of rate cuts by the major central banks yesterday (Wednesday) is likely to provide at least a short-term alleviation of the extremely negative sentiment towards financial markets," said Barclays Capital analyst David Woo.
"Even though markets had been increasingly expecting such a move and equity prices ended lower yesterday, things would have probably been a lot worse in the absence of the co-ordinated easing."
Woo added: "The fact that interest rate cuts do not directly address the underlying problems in financial markets means that further measures are required to achieve even a semblance of stability."
The yen meanwhile fell back from recent highs against the dollar and euro Thursday as ailing stock markets showed signs of stabilising, dealers said.
"People have apparently taken (the coordinated monetary easing) positively, and the sense of risk aversion eased," Satoshi Okagawa, head of the forex spot trading group at Sumitomo Mitsui Banking Corp, told Dow Jones Newswires.
The Japanese currency has been the main winner amid the recent financial turmoil as speculators sell off investments in other currencies in favour of yen.
Traders said it was unclear whether the yen would extend its retreat because no one knows whether stock markets can avoid further heavy losses.
"It's too early to say whether the unprecedented and bold policy response to the financial crisis will unfreeze credit markets," NAB Capital analyst John Kyriakopoulos wrote in a note to clients.
Traders were looking ahead to Friday's meeting of finance ministers and central bankers from the Group of Seven (G7) major economies -- Britain, Canada, France, Germany, Italy, Japan and the United States.
Elsewhere on Thursday, the British pound tumbled to 1.7171 dollars -- the lowest point since December 2005 -- after more bad news on the housing front.
House prices in Britain plunged 12.4 percent in September compared with the same month in 2007, the biggest drop on record, home loans provider Halifax said in a monthly survey.
In late morning trading in London on Thursday, the euro changed hands at 1.3758 dollars against 1.3663 late Wednesday, at 139.47 yen (135.85), 0.7944 pounds (0.7897) and 1.5494 Swiss francs (1.5397).
The dollar stood at 101.34 yen (99.42) and 1.1259 Swiss francs (1.1265).
The pound was at 1.7326 dollars (1.7298).
On the London Bullion Market, the price of gold slid to 891.45 dollars an ounce from 903.50 dollars late Wednesday.
