Euro flat against dollar amid hopes for EU summit

TOKYO: The euro was flat against the dollar in Asia Wednesday, with earlier strength caused by hopes of a resolution to Greek bailout talks offset by progress in the US debt ceiling stand-off.

The euro stood at $1.4153 in Tokyo afternoon trade against $1.4150 in New York late Tuesday. It had hit $1.4171 Tokyo morning.

The European common unit was slightly firmer at 112.03 yen against 112.01 yen.

The dollar edged down to 79.17 yen from 79.21 yen. The euro had firmed after a European Central Bank official indicated room for flexibility on conditions for a fresh bailout for Greece, raising expectations for a deal at Thursday's eurozone summit meeting.

The ECB Governing Council member Ewald Nowotny told a broadcaster that "some proposals that deal with a very short-lived default situation... wouldn't really have major negative consequences," Dow Jones Newswires reported.

The bank's position has previously rejected any solution that would see Athens defaulting, even for a brief period.

Leaders of the eurozone countries will hold an emergency summit Thursday aimed at averting a default by Greece and preventing the debt contagion in larger economies such as Italy and Spain.

The dollar, meanwhile, was lifted in early Asian trade by US President Barack Obama's statement that there was strong progress towards a long-term deal on reducing the US deficit.

Obama and his Democratic counterparts are struggling to find an agreement with their Republican rivals that will allow the nation's debt limit to be raised to avoid a default.

The progress in US debt ceiling negotiations has reduced the risk that the US credit rating will be lowered, Hideki Hayashi, global economist at Mizuho Securities, said.

A default by the United States would shatter global markets, with many analysts warning of a new financial crisis.

The dollar was weaker against other Asian currencies, falling to Sg$1.2143 from 1.2162 on Tuesday, to 1,055.25 South Korean won from 1,059.20 and to Tw$28.87 from 28.92.

The unit also retreated to 42.76 Philippine pesos from 42.98, to 29.88 Thai baht from 29.94 and to 8,538.75 Indonesian rupiah from 8,559.12.

Copyright AFP (Agence France-Presse), 2011