Share

Euro softer ahead of ECB meeting

Tokyo - The euro eased slightly in Asia on Thursday as markets took profit ahead of a European Central Bank policy meeting, which is widely expected to deliver a 25-basis-point rate hike.

The single currency fetched $1.4310, dropping from $1.4332 late on Wednesday in New York.

The euro has posted strong gains against the low-yielding yen and the dollar since the ECB recently raised its anti-inflation rhetoric.

On Wednesday the single currency pushed up to its highest level against the dollar in over a year.

"Traders are squarely focused on the ECB being the first major central bank (apart from China) to start raising interest rates, with a 25bps hike tonight fully priced," said John Kyriakopoulos at National Australia Bank.

Investors have been stocking up on the euro recently because they're "99.999% certain" that the ECB will raise its key policy rate to 1.25%, said Tsutomu Soma, a senior dealer at Okasan Securities.

"Investors see Germany's high inflation rates, and they also believe the ECB now can't do something that goes completely against what the market is expecting," he said.

The expectations around the ECB have even overshadowed the eurozone debt crisis for now, with traders looking past Portugal's request on Wednesday for a financial bailout from the European Union.

The euro is likely to continue falling even after the ECB decision later in the day, said Kenichiro Ikezawa, a senior fund manager at Daiwa SB Investments.

"It's easy to imagine that there will be more profit-taking orders," he said, adding the single unit may fall to as low as $1.4100.

Meanwhile, the yen recovered some ground as the Bank of Japan kept its low policy rates and offered a new lending programme to ease to ensure sufficient funds supply in areas hit by the March 11 earthquake, tsunami and an ensuing nuclear crisis.

The yen has slipped in recent days, as a widening interest rate differential with other major currencies appears to be fuelling selling of the Japanese unit by hedge funds and other investors, dealers said.

The dollar was at ¥85.26, down from ¥85.44. The Japanese unit also climbed against the euro at ¥122.02 from ¥122.48.

The dollar climbed to 1 087.80 South Korean won from 1 086.90 and to 8 675.00 Indonesian rupiah from 8 652.50.

It was softer against other major Asian currencies, falling to Tw$28.96 from 29.00, to 43.08 Philippine pesos from 43.17, and to 30.11 Thai baht from 30.14.

It was flat at Sg$ 1.2609.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.87
+0.3%
Rand - Pound
23.84
+0.3%
Rand - Euro
20.38
+0.3%
Rand - Aus dollar
12.32
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders