Euro Rises Toward 3-Week High Versus Yen as Germany Backs ECB
Tuesday, 07 August 2012 | 14:00
The euro rose toward a three-week high against the yen after the German government backed European Central Bank President Mario Draghi’s proposals on bond purchases to help cap borrowing costs in Spain and Italy.
The shared currency appreciated against most of its 16 major counterparts before German factory data that may add to the case for the ECB to do more to counter the region’s debt crisis. Australia’s dollar strengthened to a four-month high after the nation’s Reserve Bank kept interest rates unchanged at a policy meeting.
The euro rose 0.3 percent to 97.35 yen at 9:46 a.m. in London after climbing to 97.80 yen yesterday, the strongest level since July 12. The 17-nation currency gained 0.1 percent to $1.2417. The yen fell 0.2 percent to 78.39 per dollar.
The German government is “not worried” by Draghi’s announcement of Aug. 2, deputy Merkel spokesman Georg Streiter told reporters at a regular press briefing in Berlin yesterday, when asked whether the government is concerned that ECB independence might be compromised.
Draghi outlined a plan last week under which the ECB may buy debt of struggling euro-bloc countries in tandem with the euro area’s bailout fund, while saying the details still need to be worked out over the coming weeks.
“The fact that the German spokesperson made an official statement for the first time about the country’s backing of ECB’s bond purchases is supporting the euro,” said Ken Takahashi, assistant vice president of global markets at Sumitomo Mitsui Trust Bank Ltd. in New York. “The market is reassessing the ECB’s decision from last week and taking a more positive view on it.”
Australia’s dollar climbed to the strongest since March after the Reserve Bank said current policy settings were “appropriate.” RBA Governor Glenn Stevens and his board said in a statement the nation’s growth was close to trend.
“The RBA hasn’t really set out a case for lowering interest rates, so I suspect that’s probably maybe a surprise to the markets,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. The overall statement “seemed to be quite bullish for the Aussie dollar.”
The so-called Aussie appreciated 0.1 percent to $1.0578 after reaching $1.0604, the strongest level since March 20.
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