Euro falls amid uncertainty over Greek bailout

TOKYO: The euro fell against the dollar in Asia on Monday amid uncertainty surrounding talks towards securing a eurozone bailout for bankruptcy-threatened Greece, dealers said.

The euro fell to $1.4235 in Tokyo afternoon trading from $1.4301 in New York late Friday. The European single currency also sagged to 114.11 yen from 114.46 yen.

After seven hours of crunch talks, eurozone finance ministers said they and the IMF would release 12 billion euros of loans in "mid-July" on condition Greece adopted tough budget cuts and asset sales.

Dealers said that trading would continue to be choppy without a final agreement.

"The euro softened Monday as details about the bailout plan failed to dispel uncertainty over whether Greece would gain sufficient funds that it needs for the time being," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

Markets worry a default on Greek debt could trigger a cascade of problems in Europe's bigger economies, including Spain. Such a domino effect could again hobble the global financial system, much like the massive crisis of 2008.

Showing the extent of international fears over renewed financial contagion, G7 finance ministers from Britain, Canada, France, Germany, Italy, Japan and the United States held a late-night telephone conference to discuss the Greek debt crisis.

Athens will now receive a 12-billion-euro fifth loan tranche once the Greek parliament passes a new austerity package.

Ministers also agreed that the critical second bailout for Greece, expected to top 100 billion euros, will see banks, pension funds and insurers invited to agree to "informal and voluntary rollovers" of existing debts years after their original redemption dates.

A reshuffled Greek government has vowed to deliver on new promises of austerity ahead of a parliamentary confidence vote set for Tuesday.

The euro was also lower as Prime Minister George Papandreou faces a vote of confidence Tuesday, said a fund manager at SB Investments.

"If the vote were rejected, uncertainty (over Greek politics) would grow to a large degree," he told Dow Jones Newswires.

On Monday the dollar firmed to 80.20 yen from 80.03 yen.

On the US side, a Federal Open Market Committee meeting as well as Federal Reserve Chairman Ben Bernanke's comments on Wednesday will be in focus, dealers said, amid recent signs of weakness in the world's biggest economy.

The dollar was mostly lower against other Asian currencies.

It fell to Sg$1.2366 from Sg$1.2402 on Friday, to 43.64 Philippine pesos from 43.72, to 1,083.40 Korean won from 1,085.80 and to 8,585.00 Indonesian rupiah from 8,595.00.

The dollar edged down to 30.56 Thai baht from 30.58 while firming to Tw$28.94 from Tw$28.92.

Copyright AFP (Agence France-Presse), 2011