TOKYO—The euro rose against the dollar and yen in Asia on Monday after the European Union agreed to a bailout for Spain's banks, but dealers said the gains are unlikely to last as the move isn't a comprehensive solution to the region's debt problems.
Spanish Finance Minister Luis de Guindos said Saturday the EU will grant Spain a loan of up to €100 billion, or about $125 billion, that the government will funnel to banks in need of capital.
Markets welcomed the deal, with regional stock indexes higher and the euro gaining against most of its rivals. As of 0450 GMT, the common currency was at $1.2635 from $1.2517 late Friday in New York. Against the yen, it was at ¥100.58 from ¥99.50.
"With the €100 billion agreement, we may have avoided an immediate deterioration in the crisis, but the flash points are still there," said Hirotsugu Inoue, head of FX sales at UBS in Tokyo.
Also over the weekend, a series of Chinese data suggested growth in the world's second-largest economy is likely to pick up toward the second half of this year. But the impact of the data on the currency market was limited, as markets were more focused on the Spanish deal.
Looking ahead, investors will pay attention to an election in Greece this weekend.
Junya Tanase, J.P. Morgan's chief Tokyo currency strategist, said there is a more than a 70% chance Greece will remain in the euro zone, regardless of the election outcome.
"It's very unlikely that Greece will exit the euro-zone suddenly, which suggests we may see a bit more short-covering from the recent risk-off sentiment," he said.
The greenback was at ¥79.63 from ¥75.92 late Friday.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 81.840 from 82.442.
Write to Takashi Mochizuki at takashi.mochizuki@dowjones.com
