Thursday, 07 February 2013 09:20
TOKYO: The euro weakened in Asia on Thursday ahead of a European Central Bank policy meeting later in the day and after French officials called for possible market intervention to curb the unit's rise.
In Tokyo trading, the single currency slipped to 126.32 yen from 126.46 yen and to $1.3513 from $1.3519 in New York on Wednesday.
The dollar weakened to 93.47 yen from 93.57 yen in US trading, halting the Japanese currency's steep slide after it plunged to its lowest level in nearly three years against the greenback a day earlier.
The yen's sharp tumble followed Bank of Japan (BoJ) Governor Masaaki Shirakawa's announcement late on Tuesday that he planned to quit about three weeks before the end of his term.
His offer to resign intensifies the search for a successor who would take aggressive monetary policies promised by the new government led by Prime Minister Shinzo Abe, analysts said, after the BoJ and Tokyo butted heads on how to stoke the world's third-largest economy.
Despite the rise, "recent yen losses could feed back upon the yen creating further short-term pressure", Credit Agricole said in a note.
The euro's weakening comes after the unit hit multi-year highs in recent days, following stronger-than-expected eurozone data. On Wednesday, Germany said factory orders rose a better-than-expected 0.8 percent in December.
The figures came ahead of policy meetings by the ECB and Bank of England later Thursday.
"No change in policy is expected at both meetings," National Australia Bank said in a note.
"At ECB President (Mario) Draghi's press conference, we do not expect him to turn in a more dovish performance. Rather we expect him to once again outline the improvement in financial markets as euro area fragmentation risks fade and other indicators of risk improve," it added.
Weighing on the euro were concerns about political instability in Spain, where the government is under attack over corruption allegations, and Italy, where controversial former prime minister Silvio Berlusconi was gaining in election polls.
Earlier this week, French President Francois Hollande called for the eurozone to manage its exchange rate, a point echoed by his Finance Minister Pierre Moscovici who warned the euro's rise could hurt the bloc's recovery.
Berlin on Wednesday responded that the euro was "currently not overvalued".
The back and forth followed criticism levelled at Tokyo over its exchange-rate policy, with Japanese officials repeatedly denying accusations they were devaluing the yen in a move that risked a global currency war.
Copyright AFP (Agence France-Presse), 2013