The euro rose to two-month highs versus the dollar and yen after a Greek government official signaled confidence the currency bloc’s finance ministers will approve a second financing accord for the debt-strapped nation. The common currency extended its gain against the yen to a third day after Greek politicians debated budget cuts needed to secure the bailout with a dispute remaining over pension cuts. The European Central Bank meets today to set monetary policy. The Dollar Index (DXY) touched the lowest in two months as Asian stocks erased drops, sapping demand for a haven. “The market thinks they’ll patch together some sort of deal,� said Tim Kelleher, head of institutional foreign- exchange sales in Auckland at ASB Institutional, a unit of Commonwealth Bank of Australia, referring to Greece. “The market still appears to be very short euros as a speculative position, so that’s one of the reasons why it’s not going down.� A short position is a bet a currency will depreciate. The euro rose 0.4 percent to $1.3306 as of 6:37 a.m. in London from the close in New York yesterday. It earlier reached $1.3313, the highest since Dec. 12. The European currency advanced to 102.77 yen, a level unseen since Dec. 13, before trading 0.6 percent higher from yesterday’s close at 102.74. The dollar gained 0.2 percent to 77.18 yen. The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, slid 0.4 percent to 78.420 after touching 78.407, the lowest since Dec. 8. The MSCI Asia Pacific Index (MXAP) of stocks erased a decline of as much as 1 percent and was little changed at 126.65. One Exception Greece must pass an accord on spending cuts to receive a 130 billion-euro ($173 billion) rescue package from the so- called troika of lenders and avoid default. Greek Prime Minister Lucas Papademos and the leaders of the three parties supporting the government “agreed on all the points of the program with the exception of one which requires further elaboration and discussion� with the lenders, according to an e-mailed statement from the premier’s office. They failed to resolve a dispute over pension cuts. The troika refers to the European Commission, the European Central Bank and the International Monetary Fund. Euro-area finance ministers, to be joined by IMF Managing Director Christine Lagarde, will convene at 6 p.m. in Brussels, according to a statement by Luxembourg Prime Minister Jean- Claude Juncker, who chairs the group of finance chiefs from the currency bloc. That gathering will follow the monthly meeting today of the ECB’s governing council in Frankfurt. The central bank will keep the benchmark interest rate unchanged at 1 percent, economist estimates compiled by Bloomberg News show. Monetary Policy The euro has fallen 3.3 percent in the past three months, the worst performance among the 10 currencies tracked by Bloomberg Correlation-Weighted Indexes. The pound has posted the second-biggest decline and lost 1.9 percent. The Bank of England will increase bond purchases by 50 billion pounds ($79 billion) at a policy meeting today, according to a separate Bloomberg survey. The central bank may raise purchases by 75 billion pounds “assuming the BOE can find the available assets to purchase, given they are running out of available options,� Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a report today. “The higher outcome would likely weigh on the pound.� The pound added 0.2 percent to $1.5846 after losing 0.5 percent yesterday. South Korea’s won weakened against 13 of its 16 major peers after the Bank of Korea kept the benchmark interest rate unchanged at 3.25 percent today. The won was little changed at 1,115.73 per dollar after falling as much as 0.5 percent earlier. To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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