WSJ:WORLD FOREX: Euro Up After EU Summit, Yen Gains After BOJ
By Takashi Mochizuki
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The euro jumped to a seven-week high against the dollar and gained against the yen after European leaders ended a marathon meeting with an apparent deal on Greek debt and a roadmap for the expansion of Europe's emergency bailout fund.
The yen rose after the outcome of the Bank of Japan's policy board meeting underwhelmed investors. The board announced a Y5 trillion increase in its asset-purchase program, in line with market expectations, which many analysts saw as a conservative step that would likely fail to curb the soaring currency.
French President Nicolas Sarkozy declared that talks with private-sector lenders had produced a "durable solution" to the Greek crisis, with an agreement by private investors to accept a 50% writeoff on their holdings of Greek debt. The private-sector involvement had been a critical issue in the dispute.
As part of the agreed package, the European Financial Stability Facility is expected to be leveraged four to five times, to around 1 trillion euros, although further talks are necessary, officials said.
The euro climbed to a seven-week high at $1.3995. At 0450 GMT, it was at $1.3983, up from $1.3906 late Wednesday in New York, according to data from EBS.
Against the yen, the common currency was at Y106.30 from Y105.98.
Markets remained somewhat skeptical over the summit outcome and euro's outlook, however.
"They are so good at presenting things like this, but they've just bought some time and the debt issues are still far from over," said Masanobu Ishikawa, a senior dealer at Tokyo Forex and Ueda Harlow.
He said the deal largely was within expectations and that the euro would remain under downward pressure in the medium-term.
The yen's strength persisted after the European summit and BOJ outcomes, with the dollar falling to an intraday low at Y75.94. At 0450 GMT, the dollar was at Y76.01 from Y76.16 in New York.
"It's clear that speculators are rushing into the yen while watching the European situation, rather than the (yen's) moves reflecting economic fundamentals," Japanese Finance Minister Jun Azumi said early Thursday.
Among other currency pairs, the dollar was at CHF0.8784 at 0450 GMT from CHF0.8807 while the British pound was at $1.6014 from $1.5981. The ICE Dollar Index was at 75.835 from 76.209.
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