TOKYO: The euro edged down against the dollar in Asia on Tuesday, with the market focused on signs of progress in eurozone leaders' efforts to enhance the bloc's bailout facility and contain its debt crisis.
The greenback regained ground against the yen but remained close to its postwar record low of 75.78 yen hit in New York Friday, as Japanese Finance Minister Jun Azumi again warned that he could act to tame the yen's strength.
The euro eased to $1.3903 and 105.84 in Tokyo trade from $1.3930 and 105.97 yen in New York late Monday. The dollar inched up to 76.13 yen from 76.03 yen.
The eurozone is looking to enhance its rescue fund, the European Financial Stability Facility that currently has a 440 billion euro lending capacity, to demonstrate that it can protect indebted nations such as Italy and Greece.
In the wake of a weekend summit, EU leaders outlined a plan to inject funds into distressed European banks, but no firm decision has been reached on how much of a loss Greek investors will have to take on their debt holdings amid a push for Greek bondholders to accept more of the burden for a second bailout.
European leaders, including French President Nicolas Sarkozy and IMF chief Christine Lagarde, on Sunday said "good progress" had been made in talks on the crisis that has threatened the world economy.
The euro got some support in the wake of the news but investors want to see that progress turned into a definitive and binding agreement at a second EU and eurozone summit on Wednesday if the gains are to be sustained.
Chancellor Angela Merkel needs an approval of Germany's parliament before she can back a plan to boost the firepower of the bailout fund at the summit.
The German parliament is to vote on Wednesday on proposals to boost the EU's bailout fund, sources close to conservative CDU and CSU parties said on Monday.
Japan's Azumi said on Tuesday that Europe was close to a resolution of its debt crisis and urged the continent's leaders to close the deal for the sake of the global economy.
"The European issue is in its final stage. Focus is on whether (Europe) can construct a scheme that could offer a sense of relief to the world," Azumi told reporters. "We want them to firmly get that done."
Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, said the market was closely watching events in Germany.
Yuzo Sakai, manager of FX business promotion at brokerage Tokyo Forex & Ueda Harlow, told Dow Jones Newswires: "While expectations for the summit may help the euro, it has also become attractive for profit taking."
Meanwhile, concern over Japan's possible intervention underpinned the dollar against the yen while speculation about US credit easing is weighing on the US unit, Sakai said.
Comments
Comments are closed for this article.