IST: Euro rises vs. dollar, yen as talks on Ireland rescue make headway
TOKYO, Nov. 18, 2010 (Kyodo News International) -- The euro climbed against the dollar and the yen Thursday in Tokyo as concerns about Ireland's fiscal and banking crisis eased somewhat following a European move to help resolve the country's financial crisis.
At 5 p.m., the euro traded at $ 1.3586-3587 and 113.11-15 yen against Wednesday's 5 p.m. quotes of $1.3525-3535 and 112.45-55 yen in New York and $1.3482-3484 and 112.46-50 yen in Tokyo.
The dollar fetched 83.25-26 yen, compared with 83.15-25 yen in New York and 83.41-43 yen in Tokyo late Wednesday.
It moved between 83.11 yen and 83.40 yen during the day, changing hands most frequently at 83.24 yen.
The European single currency stayed on an upward track against both the dollar and the yen throughout the day in Tokyo following reports that officials of the European Union, the European Central Bank and the International Monetary Fund will go to Ireland on Thursday to discuss ways to prop up its ailing banking sector.
The euro turned up also because stock market rises in Asia encouraged investors to opt for higher-yielding currencies over the dollar and the yen, dealers said. Japan's key Nikkei stock index surged some 200 points to close the day over 10,000 for the first time in five months.
Some dealers, however, expressed skepticism about whether the euro will sustain its upward momentum.
Market participants ''may not be certain yet whether assistance will be immediately extended'' to Ireland just because IMF officials are going there, said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Bank.
If rescue efforts begin in earnest, there is a possibility that investors' attention will shift away from the Irish problem, he said, while noting that any such rescue package, even if provided, would not solve the country's debt problem over the long term.
In early morning deals, the dollar was under pressure because the latest batch of U.S. economic data released the previous day showed a sharp drop in housing starts in October, dealers said.
But the dollar then went up in the lower 83 yen range and moved narrowly for the rest of the day in the absence of new trading incentives.
The dollar is still being kept up by buying that ensued in reaction to active selling prior to the U.S. Federal Reserve's announcement of new monetary easing measures earlier this month, analysts say.
Hedge funds that have been betting on the dollar's fall bought back and shored up the U.S. unit prior to their book closings through December, dealers said.
The dollar will likely be bought until hedge funds complete their position adjustments, said Satoru Ogasawara, vice president of Economic Research at Credit Suisse.
