TOKYO: The euro held firm against the dollar in Asia Friday after surging on investor relief over the agreement between European leaders on a deal to resolve the debt crisis threatening the eurozone.
The euro, which rose past $1.42 overnight to hit its strongest level in eight weeks, bought $1.4180 in Tokyo morning trade compared with $1.4187 in New York late Thursday.
The euro edged down to 107.60 yen from 107.73 yen in New York but was still sharply higher from rates in the 106-yen range a day earlier.
The dollar was trading at 75.87 yen, close to its latest postwar low of 75.66 yen touched in New York.
"Confidence is restored as markets absorb the EU rescue package and buy into the broad measures wholeheartedly," National Australia Bank said in a note.
After 10 hours of painstaking talks in Brussels, banks holding some of Greece's mountain of debt agreed to take a 50 percent "haircut" on their holdings, breaking a deadlock many hope will help end the two-year-old crisis.
The summit also established a fresh Greek bailout and a deal that will force lenders to increase their defences against losses on the debt writedown, while more than doubling the capacity of a rescue fund aimed at protecting other eurozone economies.
The euro rallied after the breakthrough deal.
National Australia Bank said the near-term focus was likely to be on China's contribution to the rescue fund.
"China's assistance is likely priced in for now, and some form of guarantees and agreements on market access are expected. Any sign of hesitation by China would be a negative shock to the market," it said.
"This present optimism is likely to be maintained in the near term. There is the potential for a small pull-back, given the rapidity of the initial move." As the yen renewed its postwar highs for the third straight day, Japan's Finance Minister Jun Azumi voiced a fresh warning against pushing the yen higher.
"We will take a decisive step if necessary," he told reporters early Friday, making market players brace for a possible yen-selling intervention despite the inability of previous recent attempts to have long-lasting effects.
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