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Jul 21, 2011

Euro Gains As German Greece-France Agree on Rescue

Tokyo- The euro strengthened against the dollar in Asia on Thursday after news that Germany and France have reached agreement on the strategy of assistance to Greece, increasing optimism even though the plan is less detailed.
The euro rose to 1.4261 dollars in Tokyo afternoon trade from 1.4212 dollars in New York Wednesday night. The European single currency also rose to 112.28 yen from 111.88 yen.
The dollar edged down to 78.72 yen from 78.77 yen, after briefly surging to 79.02 yen in afternoon trading as the purchase of foreign institutions, dealers said.
Amid hopes that the progress of Greek aid will be made at a summit later in the eurozone, the euro rose on news of the German-French agreement on "common position" on the Greek rescue package.
The agreement between German Chancellor Angela Merkel and French President Nicolas Sarkozy will be the basis for discussion at the summit of the eurozone, according to the source of the French delegation.
The purpose of their discussion was to find a Franco-German position that will be given the green light by the European Central Bank to rescue Greece's debt and the debt crisis that has shaken the euro zone economy.
Italy and Spain, which has a larger economy and the debt of Greece, has come under strong pressure of the bond market this month, triggering fears of a spread of the crisis.
The agreement raised hopes for short-term solution to the debt crisis of the Greek but "it is difficult to assess the German-French agreement itself," Junya Tanase, chief currency strategist at JP Morgan in Tokyo, told Dow Jones
Tanase noted the euro was down from previous highs because there are no details of the meeting.
"The market is now waiting to see if the Greek aid package as expected," said Dai Sato, a dealer at Mizuho Corporate Bank.
"The focus is on whether it will contain specific measures to eliminate concerns over Greece's debt problems for the moment," said Sato.
Markets do not move on data showing Japan's trade surplus staggering 897 million dollars in June, which illustrates the ongoing recovery in Japan from
the impact of the earthquake and tsunami that destroyed in March.
"The size of the surplus is not too large. Data were positive for the yen. But the market moved a little," said Sato.
The dollar fell against most other Asian currencies, to 1.2122 Singapore dollars from 1.2143 Singapore dollars on Wednesday, the South Korean won 1055.20 from 1055.25 won and became 28.85 Taiwan dollars from 28.87 dollars in Taiwan .
The dollar also slid to 42.62 Philippine pesos from 42.76 pesos and the Indonesian rupiah 8535.75 from 8538.75, but unchanged at 29.88 Thai baht.