Thursday, June 30, 2011

Euro Maintains Gain on Greek Debt Optimism

June 28, 2011

The euro maintained yesterday’s gain against the dollar on optimism Greece’s creditors will agree to roll over the nation’s debt to forestall the currency union’s first default.

The 17-nation euro advanced against 11 of its 16 most- traded counterparts after Germany welcomed proposals from French lenders on voluntary participation in the debt plan. Greek lawmakers tomorrow will vote on budget cuts and asset sales needed to secure a loan payment and future financing. The dollar dropped against most of its major peers before data forecast to show home prices in 20 U.S. cities dropped in April.

“The initial reaction is fairly positive” for the euro, said Grant Turley, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “French banks are arguably the largest private sector holders of Greece debt.”

The euro was at $1.4297 at 10:15 a.m. in Tokyo from $1.4287 in New York yesterday after earlier rising as much as 0.3 percent. The common currency traded at 115.47 yen from 115.58 yen, following yesterday’s 1.3 percent gain. It touched 89.58 British pence, the strongest since June 8, before trading at 89.46 from 89.35 yesterday.

The dollar fetched 80.76 yen from 80.89. It reached 80.98 yen yesterday, the highest level since June 16.

Greek Prime Minister George Papandreou called on lawmakers to obey their “patriotic conscience” and back tougher austerity measures, as they began to debate a five-year budget plan yesterday. Failure to pass Papandreou’s proposed 78 billion euros ($111 billion) of cuts and asset sales may lead to the euro area’s first sovereign default.


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