Euro rises from more than two-month low
Published 29/11/2010 | 09:58
The euro strengthened, rebounding from more than a two-month low against the dollar, as European governments handed Ireland an €85bn aid package.
The 16-nation currency gained against 8 of its 16 major counterparts after European finance ministers scaled back proposals to saddle bondholders with losses in future budget crises, seeking to reverse the market selloff menacing the region.
The dollar traded near a two-month high against the yen as concern military action on the Korean peninsula will escalate boosted demand for the US currency as a refuge.
“The bailout for Ireland is providing some respite for the euro as it restores some calm and soothes some fear,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd in London.
“It’s a step in the right direction but it’s not a turning point. I doubt if the worst is over for the euro.”
The euro appreciated 0.3pc to $1.3287 as of 8:25am in London, reversing an earlier 0.5pc decline to $1.3182, its weakest level since September 21.
The common currency was at 111.45 yen, from 111.37 yen. The dollar traded at 83.95 yen, from 84.10 yen on November 26, when it reached 84.19 yen, the strongest since September 28.
Ireland said it will pay average annual interest of 5.8pc on the package, which breaks down into €45bn from European governments, €22.5bn from the International Monetary Fund and €17.5bn from Ireland’s cash reserves and national pension fund.
The European finance ministers agreed a future crisis-management system won’t automatically cut the value of bond holdings.