TOKYO — The euro on Thursday briefly hit US$1.40 for the first time in seven weeks in Asia after the eurozone sealed a basic deal to overcome its debt crisis following tough talks in Brussels. The single currency briefly rose to the US$1.40 level at 0527 GMT, compared to US$1.3908 in New York late Wednesday. The talks saw banks agree to take a 50 percent loss on their Greek debt holdings, removing a major hurdle in Europe’s path towards solving its fiscal woes.
Officials announced the deal following talks in Brussels between leaders of the eurozone and the Institute of International Finance banking lobby to force the private sector to share the pain of Greece’s debt burden. The haircut will enable Athens to cut its 350 billion euros (US$490 billion) debt load by about 100 billion euros, French President Nicolas Sarkozy said.
Convincing banks to erase billions in Greek debt was a key part of a grand deal leaders had pledged to deliver at the eurozone summit, along with a bank recapitalization and a beefed-up rescue fund to soothe fears of a global recession sparked by the region’s fiscal woes. Sarkozy said eurozone leaders have agreed to leverage the firepower of their bailout fund to 1 trillion euros from 440 billion euros. He announced the agreement at the close of 10 hours of summit talks aimed at hammering out a package of measures to contain Europe’s two-year debt crisis.