By Polya Lesova, MarketWatch
LONDON (MarketWatch) — The euro gained against the U.S. dollar on Monday, buoyed by news that the European Union and the International Monetary Fund are prepared to provide aid for debt-laden Ireland following the country's formal request for assistance.
The European single currency gained 0.5% to trade at $1.3741 in early London trading. It earlier hit an intraday high of $1.3787, according to data from FactSet Research.
Meanwhile, the dollar index (DXY 78.12, -0.38, -0.49%) , which tracks the performance of the greenback against a basket of other major rivals, fell 0.5% to 78.129.
The Irish government announced late Sunday that it has applied for financial assistance from the EU.
In response, euro-zone finance ministers welcomed the move and said that giving aid to Dublin is “warranted to safeguard financial stability in the EU and in the euro area.” The IMF also announced it is ready to support the aid effort.
Details of the size and conditions of any bailout package remained unclear. The program will address the fiscal challenges of the Irish economy and also include a fund for potential future capital needs of the banking sector, euro-zone finance ministers said in a statement.
“The [euro] starts the week among the top G10FX performers with a [euro/U.S. dollar] relief rally pulling up spot back towards the 1.38 level for the first time in two weeks,” analysts at Societe Generale wrote in a note to clients.
“While we are not sure how long the Irish news will be ‘positive’ for the euro, the speculative [foreign-exchange] market isn’t long any more,” they said.
In other trading, the British pound gained 0.5% to trade at $1.6059, while the dollar edged down against the Japanese yen to trade at 83.43 yen.
