The euro rose against the Swiss franc as stocks advanced on optimism measures announced by European officials yesterday will contain the region’s debt crisis, damping demand for haven assets. The 17-nation currency headed for its first weekly gain versus the dollar since July 1 after policy makers eased the terms of loans for cash-strapped nations and expanded aid for Greece. The yen slid from a four-month high amid speculation the U.S. is closing in on a deal to raise its debt ceiling. South Korea’s won climbed to its strongest level in almost three years as Europe’s accord spurred demand for higher-yielding assets. “The market seems to be receiving the rescue package quite positively,” said You-na Park, a currency strategist at Commerzbank AG in Frankfurt. “This is supportive for the euro and rather negative for the Swiss franc. It’s quite obvious the Swiss franc is overvalued, and we might see some kind of a correction.” The euro rose 0.6 percent against the Swiss franc to 1.1823 as of 7:16 a.m. in New York after reaching 1.18917, the strongest level since July 11. It was 0.1 percent stronger against the yen at 113.02. Japan’s currency dropped 0.2 percent to 78.48 per dollar, after reaching 78.22, the strongest since March 17. It’s up 0.8 percent this week against the dollar. After eight hours of talks in Brussels, euro-area leaders announced 159 billion euros in new aid for Greece yesterday, with bondholders agreeing to contribute to the package. They also empowered their 440-billion euro rescue fund to buy debt across distressed euro nations, to aid troubled banks and to offer credit lines. ‘Relief Rally’ Greek two-year notes rallied, pushing the yield down 776 basis points to 26.05 percent, while the yield on benchmark German bunds, perceived as a refuge because of the nation’s AAA credit rating, rose two basis points to 2.89 percent. The MSCI Asia Pacific Index of regional shares rose 1.3 percent and the Stoxx Europe 600 Index added 0.8 percent. The agreement was “better than expected,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “It looks like you’ll get a bit of a relief rally and euro-Swiss goes higher.” The won gained as much as 0.4 percent to 1,050.05 per dollar, before trading at 1051.98. The Singapore dollar, New Zealand dollar and Swedish krona also advanced, while China’s yuan had the biggest weekly advance in three months. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, reached the highest level since Aug. 12, 1997. Ifo Report “You have to have a slightly more confident feel to the world today because of the commitment of European leaders to the periphery,” said Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. As a result, there may be “dollar weakness against commodity currencies and growth currencies,” he said. The Canadian dollar weakened 0.6 percent to 94.98 cents per U.S. dollar after a report showed the nation’s inflation rate slowed in June. The euro was weaker against the dollar as German business confidence declined more than economists forecast to the lowest level in nine months in July. The Ifo institute’s business climate index, based on a survey of 7,000 executives, declined to 112.9 from 114.5 in June. Economists forecast a drop to 113.7, according to the median of 42 estimates in a Bloomberg News survey. U.S. Debt Ceiling The greenback was at $1.4401 per euro from $1.4425. It touched $1.4439, the weakest since July 6. The dollar has fallen 1.7 percent against the euro this week. The dollar also rose against the yen following reports the White House is cutting a deal with House Republicans to boost the U.S. debt ceiling and reduce deficits by about $3 trillion over 10 years without immediate revenue increases. Obama’s team has told congressional leaders it is pursuing such a deal, according to two officials familiar with the talks. “The dollar has been bought back when reports about a solution came up in the past,” Mizuho’s Suzuki said. “The bias is for the dollar to be purchased when similar talk comes up.” The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, was little changed at 74.077 today after sliding 1 percent yesterday. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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