BLBG:Euro Retreats From Three-Week High as EU Officials Discuss Greek Debt Swap
The euro slid from an almost three week high after European finance ministers called on Greek bondholders to provide greater relief in a debt-swap agreement to help end the region’s sovereign crisis.
Losses in the 17-nation currency were limited before reports forecast to show a slower contraction in European services and manufacturing output. Demand for the dollar may be curtailed before the Federal Reserve begins a two-day policy meeting today, after which it will provide forecasts for its benchmark interest rate for the first time. The yen was little changed after the Bank of Japan cut its economic growth forecast for next year as it held its key rate near zero.
“It’s unlikely we’ll see continued buying of the euro,” said Kumiko Gervaise, an analyst in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency margin-trading company. It’s no guarantee that Greece can return to markets for funding “even with the debt-swap deal.”
The euro dropped 0.2 percent to $1.2989 at 1:02 p.m. in Tokyo from $1.3013 in New York yesterday, when it reached $1.3053, the most since Jan. 4. The common currency fell 0.2 percent to 100.04 yen after gaining 0.6 percent yesterday. The dollar was little changed at 77.01 yen.
“It’s obvious that the Greek program is off track,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing a meeting of European finance ministers in Brussels. He called on creditors to drop demands that new bonds carry coupons averaging 4 percent.
Greece Aid
Euro governments stood by an October offer of 130 billion euros ($170 billion) for a second Greek aid package. Officials want to fill a deeper-than-expected hole in Greece’s finances by saddling investors with a lower interest rate on exchanged bonds. Policy makers also discussed new fiscal rules and an enhanced rescue fund for debt-strapped countries ahead of a European leaders’ summit next week.
A euro-area composite index based on a survey of purchasing managers in both manufacturing and services industries rose to 48.5 this month from 48.3 in December, London-based Markit Economics will probably say in an initial estimate today, according to the median projection of economists in a Bloomberg News survey. That would be the fifth monthly reading below 50, indicating contraction.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
