BLBG:Euro Strengthens as Greek Minister Says Agreement on Debt is ‘Attainable’
The euro strengthened against the dollar after Greece’s finance Minister Evangelos Venizelos said an agreement to resolve Europe’s debt crisis is “attainable” at a summit of European leaders to be held in two days.
The 17-nation currency appreciated versus the yen as Italian and Spanish government bonds advanced for the first time in four days, narrowing the difference in yield, or spread, to benchmark German bunds. European Central Bank Governing Council member Ewald Nowotny signaled the central bank may be willing to compromise on the use of Greek bonds as collateral.
“The Greek finance minister released an interview that suggested an agreement could be reached this week,” said Daragh Maher, deputy head of global foreign-exchange strategy at Credit Agricole Corporate & Investment Bank in London. “Spreads are a bit tighter and there’s a partial retracement” of the euro, he said, because “you’d be caught out badly” if policy makers do reach a credible solution for the debt crisis.
The euro rose 0.3 percent to $1.4153 as of 8:32 a.m. in London. It also strengthened 0.3 percent to 111.84 yen and gained 0.5 percent to 1.16045 Swiss francs. The yen was little changed against the dollar at 79.05.
The ECB will decide whether to accept Greek debt as collateral in case rating agencies slap the country with a default rating, Nowotny said.
“At the end of the day it has to be the decision of the ECB. The ECB should not be totally dependent on rating agencies,” he said in an interview with CNBC. “It is our own responsibility, our own decision. We have proved this in the case of Ireland, Greece and Portugal, with regard to what kind of collateral we accept.”
Switzerland’s currency weakened against all 16 of its major peers tracked by Bloomberg on speculation Swiss banks may pay at least 4 billion francs to settle a dispute over tax evasion by wealthy German clients.
To contact the reporters on this story: Paul Dobson in London at pdobson2@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.
