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Euro firms on Greek rescue hopes

The euro rose in Asian trade Monday amid growing confidence that Greece will finally be given a fresh bailout, while the dollar was up against the yen after Japan posted a record trade deficit.

The European unit bought $1.3211 and 105.05 yen in Tokyo afternoon trade Monday, compared with $1.3148 and 104.54 yen in New York late Friday.

The dollar traded at 79.52 yen against 79.17 in New York.

The euro will trend upward against the dollar and the yen throughout the day as dealers await an all-important meeting of eurozone finance ministers, said Kengo Suzuki, forex strategist at Mizuho Securities.

The 17-nation eurozone will later Monday discuss approval of a Greek rescue package of 130 billion euros, which is expected to go hand in hand with a writedown on privately held government bonds worth at least 100 billion euros.

“If the eurozone ministers agree on the bailout plan Monday, traders’ eyes will shift to a Group of 20 meeting of finance ministers” this weekend, added Masafumi Yamamoto, currency analyst at Barclays Capital.

Risk sentiment also improved after China at the weekend reduced the amount of money banks must hold in reserve, freeing up more cash to lend, dealers said.

Yamamoto said the yen’s weakening trend against the dollar would likely continue due to Japan’s worsening trade balance as well as hopes of economic recovery in the United States.

Japan logged a record trade deficit of 1.475 trillion yen in January, data showed Monday, as fuel imports rose to meet energy needs after last year’s nuclear disaster. Slumping demand in debt-wracked Europe also hurt trade.

The dollar was lower against other Asian currencies. It fell to 1,123.60 South Korean won from 1,124.00 on Friday, to Tw$29.53 from Tw$29.55, to Sg$1.2535 from Sg$1.2604 and to 42.47 Philippine pesos from 42.65 pesos.

It also dropped to 9,030.00 Indonesian rupiah from 9,057.00 rupiah and to 30.74 Thai baht from 30.79 baht.

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