TOKYO: The euro rebounded against the dollar on buybacks in Asia on Friday, after earlier plunging on a Spanish ratings downgrade that spooked investors and underlined eurozone debt worries. The euro fetched $1.3817 in Tokyo morning trading, compared to 1.3794 in New York late Thursday. The single European unit gained to 114.44 yen from 114.31. The dollar fell to 82.83 yen from 82.91 yen. Investors flocked to the safe-haven dollar on Thursday as Spain received a ratings downgrade, violence surged in Libya, and China reported a rare trade deficit. Moody's said on Thursday it had downgraded Spanish debt by a notch from Aa1 to Aa2 with a negative outlook, citing uncertainty over the country's ability to improve its finances. The news gave an additional blow to the euro, amid lingering eurozone debt worries following Moody's downgrade of Greece earlier this week.
"The Spanish downgrading news prompted investors to shun risks for now," said Tomohiro Ishikawa, dealer at Chuo Mitsui Trust and Banking.
"Amid uncertainties over the course of the Middle East situation, investors are moving to avert possible risks over the weekend," Ishikawa said, noting that the market is subject to adjustments before the weekend. US officials said the momentum in the Libyan conflict was shifting in favour of Moamer Qadhafi, whose forces are "robustly equipped" with Russian weapons. Protests in Saudi Arabia saw police shoot and wound three Shiite protesters in the oil-rich Eastern Province while trying to disperse a protest calling for the release of prisoners. China said its February consumer price index was up 4.9 percent on-year, unchanged from January and higher than expectations of a 4.8 percent rise according to a Dow Jones Newswires poll of analysts. Data Thursday showing a surprise Chinese trade deficit in February raised worries about the global economy. The trade deficit of $7.3 billion compared with a surplus of $6.45 billion in January, and a surplus of $7.61 billion in February last year, customs authorities said in a statement. Japan's economy minister Kaoru Yosano said that a stronger yen limited the impact of high oil prices on the Japanese economy, according to Kyodo News.
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