Euro Rises on Speculation Germany Will Signal Aid for Region
The euro rose from near a three- month low against the dollar on speculation German Chancellor Angela Merkel will signal Europe's largest economy plans to take action to help avert the financial turmoil in the region, Bloomberg reported.
The euro snapped three days of losses against the dollar after Finance Minister Peer Steinbrueck said yesterday Germany would show its "ability to act" as some of the 16 countries that share the currency are getting into difficulties. Merkel will hold a joint press conference with European Commission President Jose Barroso in Berlin today.
"Eurozone countries have started to recognize the importance of the financial system and begun to address it properly," said Akio Yoshino, chief economist at Societe Generale Asset Management Ltd. in Tokyo. "Optimism about the stabilization of the European financial system may help to halt the recent steep decline of the euro."
The euro climbed to $1.2589 as of 12:57 p.m. in Tokyo from $1.2530 late in New York yesterday, when it touched $1.2513, the lowest level since Nov. 21. Europe's single currency advanced to 117.94 yen from 117.50 yen. The dollar traded at 93.69 yen from 93.79 yen yesterday, when it reached 93.96, the highest level since Jan. 7.
Merkel's Cabinet also approved yesterday draft legislation allowing the state to take over lender Hypo Real Estate Holding AG, paving the way for the first German bank nationalization since the 1930s. The bill, which will be put to parliament on April 3, lets the government carry out compulsory purchases of shares in "systemically relevant" banks.
"This is an appropriate response when it comes to resolving the banking system problem," SG's Yoshino said.