TOKYO: The euro was steady against the dollar in Asia on Wednesday after Italian Prime Minister Silvio Berlusconi voiced his intention to resign, boosting hopes that Italy would better address its debt problems.
The euro was flat at $1.3837 in Tokyo trade against $1.3836 in New York late Tuesday. The European common unit was also flat at 107.50 yen.
The dollar edged down to 77.60 yen from 77.70 yen.
Berlusconi said Tuesday that he would stand down as Italian prime minister once key reforms aimed at calming market turmoil are adopted this month.
The news buoyed US stocks and gave some support to the euro as it fuelled hopes that Italy would better tackle its debt mountain, analysts said.
"Compared to Greece that is facing the real crisis, fears have been a driving force behind heavy selling of Italian bonds," said Teppei Ino, analyst at the Bank of Tokyo-Mitsubishi UFJ.
"The news gave rise to hopes that fears driven by political instability would now be overcome. But this is by no means the end of the ongoing woes," Ino said.
Fears have been rising that Italy, the eurozone's third-largest economy, would follow debt-strapped Greece to the brink of collapse.
Meanwhile, the euro was weighed by failure of Greek political leaders to wrap up coalition talks.
The announcement of a Greek unity government was held up on Tuesday as the conservatives in the power-sharing coalition tried to dodge a written pledge on an EU rescue demanded by Brussels.
"It will be difficult" to obtain a deal tonight, a senior government official told state NET television after the main opposition New Democracy party opened a front with the EU over a perceived slight to national pride.
Forex markets remained steady after data showed that China's inflation slowed sharply in October, rising 5.5 percent on-year, the slowest pace since May. The data helped lift Shanghai shares 0.8 percent.
China's inflation rate has slowed for three straight months after peaking at 6.5 percent in July -- the highest level in more than three years -- as policymakers continue to clamp down on bank lending and property purchases.
Beijing, anxious about inflation's potential to trigger social unrest, has been pulling on a variety of levers to curb prices in the past year, including restricting the amount of money banks can lend and hiking interest rates.
But analysts expect authorities to ease credit restrictions in the coming months as Europe's debt crisis squeezes demand for Chinese exports -- a key driver of the Asian economy -- and small businesses struggle to get financing.
Comments
Comments are closed.