Euro gains slightly on reports of debt plan

NEW YORK: The euro edged up against the dollar Monday after several days of rising alarm over the precarious position of the eurozone and the Greek debt crisis.

The euro rose to $1.3538 from $1.3503 late Friday after starting the day lower, helped by reports that EU leaders were hashing over various ideas on how to leverage existing assets to raise money to strengthen banks and to build a financial firewall around Greece.

There was little hard news on what was happening.

In the latest of various unconfirmed reports, CNBC said the European Investment Bank could be used to form a special unit to issue bonds and buy distressed debt from European governments -- an arrangement that, when boiled down, means that Europe's troubled banks could swap mainly their Greek debt for EIB paper, which could then be used at the European Central Bank's liquidity window.

CNBC cited an unnamed source for the story, and there were no immediate public reactions from eurozone officials on it.

But it came after a day of rumors on how the single currency region would address its stresses, mainly emanating from Greece, believed on the precipice of defaults on hundreds of billions of euros of debt.

"The euro got a late bid on this CNBC story," said David Gilmore, Foreign Exchange Analytics.

"We have to wait and see if it's practical. I'm not sure the eurozone has the authority to do it -- the EIB is an independent institution," he said.

The euro rose slightly against the Japanese currency, to 103.33 yen (103.31 yen late Friday) but dropped to 1.2189 Swiss francs (1.2215 francs).

The dollar fell slightly to 76.42 yen (76.50 yen) and to 0.9013 Swiss francs (0.9042 francs).

The British pound gained to $1.5563 ($1.5463).

Copyright AFP (Agence France-Presse), 2011