Euro slightly up against dollar

TOKYO: The euro edged higher against the dollar in Asia on Thursday following overnight falls, ahead of the European Central Bank's policy meeting at which a rate hike is expected, dealers said.

The euro fetched $1.4321 in Tokyo morning trade against $1.4314 in New York late Wednesday. The European common currency edged up to 115.85 yen from 115.83 yen.The dollar was slightly higher at 80.89 yen against 80.88 yen.

With the euro's marginal gains down to position adjustments, "sentiment remains bearish for the euro due to renewed concerns about peripheral euro-zone countries," Hideki Hayashi, global economist at Mizuho Securities, told Dow Jones Newswires.

The ECB is on Thursday expected to raise interest rates for the second time this year, by 0.25 percentage points to 1.5 percent with an aim to curb inflation, dealers said.

The bank's president Jean-Claude Trichet is due to hold a news conference after the meeting.

"The biggest focus today is on whether Trichet would indicate further rate hikes later this year," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

The euro tumbled Wednesday amid ongoing concern over the euro-zone debt crisis in the wake of Moody's move Tuesday to slash Portugal's credit rating to junk status, coming on the heels of a Standard & Poor's warning over Greece.

"The downgrading of Portugal that came after S&P's warning stoked worries about contagion spreading to other peripheral nations such as Ireland," Kamei said.

After Greece passed tough austerity measures, euro-zone finance ministers authorised the next 12 billion euros ($17 billion) tranche of last year's European Union-International Monetary Fund bailout over the weekend.

The move had eased concerns about a potential cascade of problems tearing through the euro-zone and the wider global economy, but positive sentiment has since faded on bearish reports from the ratings agencies.

China's central bank said on Wednesday it will raise its benchmark deposit and lending rates by 25 basis points, the third rate hike this year and the latest effort aimed at curbing rising inflation.

"China's rate hike was an additional damper on the euro," as an economic slowdown could affect Europe, Kamei said.

Attention was also on key US jobs data due on Friday, dealers said.

Copyright APP (Associated Press of Pakistan), 2011