Dollar gains in Asian trade on Europe fears

TOKYO: The dollar rose in Asian trading Tuesday on the back of rising concerns about eurozone stability and warnings from another European official that the surging unit may be overheating.

The euro slid to $1.3489 in Tokyo afternoon trade, against $1.3503 in New York on Monday, while the greenback was also up against the Japanese unit at 92.38 yen from 92.11 yen in US trading.

The single currency strengthened to 124.58 yen compared with 124.28 yen.

Concerns over political uncertainty in Italy and Spain pressured euro-dollar trade, with investors watching to see if it breaks below the $1.34 level, said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

"If support is maintained, we could see risk appetite returning on confidence in the eurozone's economic recovery," Ishikawa told Dow Jones Newswires.

Investors were also keeping an eye on a European Central Bank meeting this week, although many analysts expect the central bank to hold off any new policy moves.

Markets were jolted after Spanish Prime Minister Mariano Rajoy was pressured to resign amid a growing corruption scandal, while in Italy, the party of former prime minister Silvio Berlusconi showed solid gains in polls ahead of national elections later this month.

Selling pressure was also stoked after French Finance Minister Pierre Moscovici said Sunday the euro was "perhaps too strong in some regards".

The minister later told AFP that he was not trying to drive down the euro, but added "it seems completely legitimate to me that there be a debate on the question of proper global exchange rates in international forums".

The resurgent currency on Friday soared above $1.36 and hit its highest level against the dollar since mid-November 2011, as a key US jobs report reinforced expectations that the Federal Reserve will maintain its ultra-loose monetary policy for the foreseeable future.

Last month, Jean-Claude Juncker, outgoing head of the eurozone finance ministers' group, warned that the euro's value was "dangerously high" as it threatens the competitiveness of European exports.

Tokyo has come in for criticism that it was orchestrating a devaluation of the yen -- which has been on a steep slide in recent months -- that risked setting off a global currency war. Japanese officials have repeatedly denied those claims.

The dollar was mixed against other Asia-Pacific currencies, falling to Sg$1.2379 from Sg$1.2387 on Monday, to Tw$29.52 from Tw$29.59 and to 1,086.63 South Korean won from 1,087.06 won.

The greenback strengthened to 40.64 Philippine pesos from 40.60 pesos, to 53.35 Indian rupees from 53.01 rupees, and to 9,698 Indonesian rupiah from 9,682 rupiah. It was nearly flat at 29.76 Thai baht.

The Australian dollar slipped to $1.0397 from $1.0422 as Australia's central bank left official rates on hold Tuesday. China's yuan fetched 14.83 yen against 14.85 yen.