Euro lower against dollar on profit taking


AFP

TOKYO — The yen fell against the dollar and the euro in Asia on Monday on speculation the Bank of Japan would take further monetary easing measures at its meeting this week.

The dollar rose to 83.58 yen from 83.25 yen on expectations that the central bank will adopt measures to pump more cash into the money market when its meeting concludes Tuesday, dealers said. The dollar’s gains were driven by short-covering and buying by Japanese importers, said analysts, with the greenback at one point rising to 83.86.

But the dollar’s gains were capped on speculation that the U.S. Federal Reserve was also ready to implement fresh monetary policy easing to help fortify a faltering recovery in the world’s biggest economy.

Against the yen, the euro bought 114.99 compared with 114.78, after hitting the highest level since May little over the 115-line earlier Monday.

The euro fell to 1.3758 dollars in Tokyo afternoon trade from 1.3787 in New York late Friday.

Short-term investors in Asia were taking profits, said a senior dealer at a major brokerage in Japan. Its recent strength “put the euro at an attractive level for profit-taking, which should put the brakes on further gains for the rest of today,” the dealer told Dow Jones Newswires. But it may avoid sharp falls with investors taking weekend comments from Chinese Premier Wen Jiabao as a show of support for the common currency, said Yuzo Sakai, manager of FX business promotion at Tokyo Forex and Ueda Harlow. Speaking in Athens on Saturday, Wen pledged to support cash-strapped Greece and the eurozone. “China will make a big effort to support the eurozone economy and Greece … China will participate in the purchase of new Greek bond issues,” Wen told a press conference. He added on Sunday that China would “support the stability of the euro” and Beijing would “not reduce the amount of European bonds that are part of the Chinese foreign exchange reserves.” China has sought to diversify its vast investments since the onset of the financial crisis, including large purchases of Japanese government bonds in recent months.