TOKYO: The euro was under pressure in Asia Wednesday as markets fretted over whether debt-ridden Spain would seek a full bailout, while a credit downgrade of five of the country's regions also weighed on the unit.
The single currency bought $1.2977 and 103.61 yen in Tokyo morning trade, down from $1.2978 and 103.64 yen in New York late Tuesday and well off the levels above $1.30 and 104 yen seen earlier this week.
The dollar was flat at 79.83 yen against 79.84 yen, after briefly topping 80 yen in Asian trade on Tuesday -- the first time since early July.
Dealers are increasingly concerned Madrid has yet to ask for a rescue, despite the poor state of its economy, while Moody's cut the ratings of five regions, citing their weak financial positions and looming debt redemptions.
A large-scale Spanish bailout would enable the European Central Bank to launch a 500-billion-euro bond-buying programme aimed at helping debt-stricken eurozone members contain their soaring borrowing costs. Madrid has already accepted a 100-billion-euro rescue for its stricken banks.
"The market is jittery as it doesn't know when Spain will ask for a bailout," said Daisaku Ueno, senior foreign exchange and fixed income strategist at Mitsubishi UFJ Morgan Stanley.
Spain, the eurozone's fourth-largest economy, is entering a second year of recession, according to the nation's central bank, as its leaders struggle to curb a bloated public deficit.
Traders were also eyeing a two-day US central bank meeting that wraps up later Wednesday and the Bank of Japan's policy meeting next week.
There has been rising speculation that the central bank will usher in more easing measures aimed at kickstarting the world's third-largest economy, which has in turn put pressure on the yen.
Ueno said the Bank of Japan may boost an 80 trillion yen asset-buying programme, its main policy tool now that interest rates are at record lows.
"I'm expecting the BoJ to expand its asset-purchase programme by between 5 trillion yen and 10 trillion yen," he told Dow Jones Newswires.
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