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Euro down against dollar on fiscal cliff deal fears

euro-1SINGAPORE: The euro fell against the dollar in Asia Thursday as euphoria over the US fiscal cliff deal gave way to concerns about future budgetary rows in Washington.


The single currency bought $1.3168 in morning Asian trade from $1.3184 in New York late Wednesday, while it was also at 114.68 yen from 115.13 yen.


The greenback traded at 87.10 yen from 87.32 yen.


The dollar lifted against the European unit as doubts emerged over the 11th-hour deal reached Wednesday to prevent the huge tax hikes and spending cuts kicking in that would have likely sent the economy into recession.


"Currency traders may be positioning themselves for the troubles that lie ahead for the US economy as Congress confronts spending cuts in two months' time," IG Markets said in a report.


Stock markets worldwide rallied after US lawmakers cobbled together a last-gasp deal to avert the fiscal cliff on New Year's Day.


However, while the plan saw tax rises for only the rich, lawmakers only delayed the imposition of spending cuts for two months, meaning another debilitating stand-off is almost certain at the end of February.


Other feuds yet to be addressed include lifting the US debt ceiling and funding government operations.


The International Monetary Fund also said Wednesday that US actions to avoid the fiscal cliff did not go far enough to address the country's long-term fiscal deficit and debt problems.

Copyright AFP (Agence France-Presse), 2013


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