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Tokyo - The euro soared against other major currencies in Asia on Monday as traders flocked to the common currency on the back of a eurozone deal to rescue Spain's troubled banking sector.
The single currency bought $1.2632 and ¥100.61 in Tokyo afternoon trade, up from $1.2514 and ¥99.49 in New York on Friday.
The rise came after eurozone finance ministers agreed at the weekend to lend Spain up to €100bn to prop up its banks.
The dollar strengthened to ¥79.63 from ¥79.49 in New York.
"Sentiment is in a risk-on mode and the news is giving the market a sense of relief," Kengo Suzuki, currency strategist at Mizuho Securities, told Dow Jones Newswires.
Deal hailed
After an emergency video conference lasting more than two hours on Saturday, eurozone finance ministers issued a statement saying they were "willing to respond favourably" to a Spanish plea for help.
The deal was hailed by Germany, France, Japan and the United States as well as the International Monetary Fund (IMF).
But dealers said the euro's gains were unlikely to last as the Spain deal was not a comprehensive solution to wider regional problems, especially given rising uncertainty ahead of Greek elections on June 17.
Investor concerns have weighed on the euro with tensions high over fears Athens may exit the bloc following the polls. The unit has tumbled to multi-year lows against the dollar and yen in recent weeks.
"With the €100bn agreement, we may have avoided an immediate deterioration in the crisis, but the flashpoints are still there," said Hirotsugu Inoue, head of FX sales at UBS in Tokyo.
Dollar loses ground
Spain's decision to rely solely on European lending surprised some observers, although Madrid was likely not keen on US involvement or that of the IMF which is expected to "keep watch on the country's fiscal policy", Hiromichi Shirakawa, analyst at Credit Suisse, said in a note.
The bank loans would also expand Madrid's deficit while Germany and other nations boasting healthier finances would want a broad say in how to overhaul the Spanish banking system, Shirakawa said.
"There is a risk that the Spanish government would only ask for an amount significantly below the sum actually needed for its private banking sector," he said.
The dollar mostly lost ground against other Asian currencies.
It fell to 1 167.15 South Korean won from 1 174.40 on Friday, to Tw$29.90 from Tw$29.92 and to 42.97 Philippine pesos from 43.22 pesos.
The greenback also dropped to Sg$1.2768 from Sg$1.2824, to 31.41 Thai baht from 31.79 baht while inching up to 9 440.00 Indonesian rupiah from 9 418.00 rupiah.
The Chinese yuan was trading at ¥12.48, against ¥12.45 on Friday.
The single currency bought $1.2632 and ¥100.61 in Tokyo afternoon trade, up from $1.2514 and ¥99.49 in New York on Friday.
The rise came after eurozone finance ministers agreed at the weekend to lend Spain up to €100bn to prop up its banks.
The dollar strengthened to ¥79.63 from ¥79.49 in New York.
"Sentiment is in a risk-on mode and the news is giving the market a sense of relief," Kengo Suzuki, currency strategist at Mizuho Securities, told Dow Jones Newswires.
Deal hailed
After an emergency video conference lasting more than two hours on Saturday, eurozone finance ministers issued a statement saying they were "willing to respond favourably" to a Spanish plea for help.
The deal was hailed by Germany, France, Japan and the United States as well as the International Monetary Fund (IMF).
But dealers said the euro's gains were unlikely to last as the Spain deal was not a comprehensive solution to wider regional problems, especially given rising uncertainty ahead of Greek elections on June 17.
Investor concerns have weighed on the euro with tensions high over fears Athens may exit the bloc following the polls. The unit has tumbled to multi-year lows against the dollar and yen in recent weeks.
"With the €100bn agreement, we may have avoided an immediate deterioration in the crisis, but the flashpoints are still there," said Hirotsugu Inoue, head of FX sales at UBS in Tokyo.
Dollar loses ground
Spain's decision to rely solely on European lending surprised some observers, although Madrid was likely not keen on US involvement or that of the IMF which is expected to "keep watch on the country's fiscal policy", Hiromichi Shirakawa, analyst at Credit Suisse, said in a note.
The bank loans would also expand Madrid's deficit while Germany and other nations boasting healthier finances would want a broad say in how to overhaul the Spanish banking system, Shirakawa said.
"There is a risk that the Spanish government would only ask for an amount significantly below the sum actually needed for its private banking sector," he said.
The dollar mostly lost ground against other Asian currencies.
It fell to 1 167.15 South Korean won from 1 174.40 on Friday, to Tw$29.90 from Tw$29.92 and to 42.97 Philippine pesos from 43.22 pesos.
The greenback also dropped to Sg$1.2768 from Sg$1.2824, to 31.41 Thai baht from 31.79 baht while inching up to 9 440.00 Indonesian rupiah from 9 418.00 rupiah.
The Chinese yuan was trading at ¥12.48, against ¥12.45 on Friday.
