BR: Euro gains ground in Asia despite Irish crisis
The euro gained ground in Asian trade on Monday despite ongoing concerns about the fall-out from Ireland's debt woes, after Europe signalled readiness to bail out the troubled nation, analysts said.
The euro bought 1.3722 dollars in Tokyo, up from 1.3696 dollars in New York late Friday. The single currency fell to a six-week low of 1.3606 last week.
The euro rose to 113.28 yen from 112.98 overnight. The dollar was quoted at 82.56 yen, slightly higher from 82.54 yen in New York.
"Investor sentiment towards the euro is calm compared to last week's slightly panicky tone," said Masatsugu Miyata, a forex analyst at Hachijuni Bank. "Although there is no clear sign of a significant improvement to the situation". The single European currency was pummeled last week amid fears over the debt of smaller economies, mainly Ireland, where the government's rising cost of bond purchases sparked rumors it may need a bailout.
Tension slightly eased after EU heavyweights Britain, France, Germany, Italy and Spain issued a joint declaration Friday insisting that a future bailout fund would not cause heavy losses to investors.
But analysts warned of further trouble in the eurozone, particularly as Ireland resisted pressure from the European Central Bank and national governments to seek a bailout amid concern the currency bloc could unravel.
Ireland has fiercely denied it was in bailout talks, and European officials have insisted Dublin was under no pressure to seek help. "I'm fairly certain that once Ireland is out of the way the market will be flipping (its attention) to Spain or Portugal next," HiFX senior trader Stuart Ive told Dow Jones Newswires. The dollar was stable against yen, with not much impact seen from positive readings of Japan's economic growth released on Monday.
The Japanese economy expanded at an annualised pace of 3.9 percent in the third quarter as car buyers rushed to make the most of expiring subsidies, beating market expectations of 2.5 percent growth.
On a quarterly basis the economy grew 0.9 percent, compared to 0.4 percent in the previous quarter.
Analysts expect growth to slow sharply or even contract in the last quarter of the year as the economy loses momentum on declining exports, hit by softening overseas demand and the impact of a strong yen. "The figures were better than expected, but the currency market is more sensitive to factors overseas," Miyata said.
