ECONOMY

Euro steady ahead of Europe summit on Greece

euro-steady-ahead-of-europe-summit-on-greece

The euro held steady Tuesday as European leaders prepare for a summit after Greece at the weekend voted against accepting more austerity measures, pushing the country closer to a eurozone exit.

In Tokyo afternoon trading, the common currency edged down to $1.1031 and 135.30 yen from 1.1057 and 135.50 yen in New York late Monday.

The dollar ticked up to 122.66 yen from 122.55 yen in US trade.

"The worst-case scenario, notably Grexit, has not hurt the euro much for now, while the best-case scenarios, including a negotiated settlement, are not a great reason to buy the euro either," Alan Ruskin, a forex analyst at Deutsche Bank, told Bloomberg News.

Following the Sunday vote, the euro dropped to $1.0963 in New York electronic trade, before gaining ground in Asia on Monday.

The rally was partly driven by news that Finance Minister Yanis Varoufakis was quitting, just hours after the referendum came back with a "no" to creditors' bailout reform proposals.

The government quickly replaced him with Euclid Tsakalotos, an economist who had been the pointman in negotiations with creditors since April and is seen as far less abrasive than Varoufakis.

Greek Prime Minister Alexis Tsipras will unveil new proposals Tuesday at a hastily arranged emergency eurozone summit in Brussels.

With the economy on the brink, the government has extended an eight-day bank closure until Thursday on fears cash machines will run dry.

The European Central Bank, which has been keeping lenders afloat, announced it would maintain a key financial lifeline to them, but turned the screw by raising the bar for them to access the emergency funds.

"People are just hanging back and watching for the most part," Greg Peters, a senior investment officer at Prudential Financial, told Bloomberg News.

"All else being equal the euro is poised to weaken from here, particularly if you believe that the US is moving regardless" to raise interest rates.

The dollar was mixed against Asia-Pacific currencies.

It fell to 13,302 Indonesian rupiah from 13,360 rupiah on Monday, to 63.34 Indian rupees from 63.59 rupees and to 45.08 Philippine pesos from 45.13 pesos.

It edged up to 33.89 Thai baht from 33.85 baht, to Tw$30.96 from Tw$30.94, to 1,130.02 South Korean won from 1,125.70 won and to Sg$1.3522 from Sg$1.3513.

The Australian dollar eased to 74.76 US cents from 74.82 cents while the Chinese yuan inched up to 19.72 yen from 19.69 yen.

[AFP}