Euro rallies on news of Merkel election


SINGAPORE–The euro rose against the dollar in Asian trade Monday after German chancellor Angela Merkel clinched her third term in a convincing election victory. The euro bought US$1.3529, up from US$1.3524 in New York late Friday, while it also bought 134.15 yen compared with 134.36 yen.

The greenback dipped to 99.16 yen, from 99.35 yen, with markets in Japan closed for a public holiday.

Merkel’s triumphant conservative Christian Democrats fell just a few seats short of an outright majority Sunday with 41.5 percent of the vote, according to provisional final results. “The election has gripped international interest as the eurozone is coming out of a recession, and continuity is what the markets favor,” Kelly Teoh, market strategist at IG Markets in Singapore, said in a note. Analysts said talk of the U.S. Federal Reserve ending its massive monetary stimulus program continues to impact on markets despite the central bank’s announcement last week that it would wait until the economy was strong enough.

Speaking on Friday, two days after the announcement by the bank’s key Federal Open Market Committee (FOMC), senior Federal Reserve official James Bullard said the cutbacks could still come this year.

“It’s possible you get some data that changes the complexion of the outlook and makes the committee comfortable with a small taper in October,” he told Bloomberg television. In other trading, the dollar strengthened to 11,495 Indonesian rupiah from 11,385 rupiah on Friday, to 1,076.24 South Korean won from 1,073 won, to SG$1.2494 from SG$1.2464. It also rose to 31.13 Thai baht from 30.97 baht, to 62.53 Indian rupees from 62.16 rupees, and to 43.15 Philippine pesos from 43.03 pesos.

The Australian dollar bought 94.26 U.S. cents compared with 94.46 cents on Friday, while the Chinese yuan was flat at 16.20 yen.