Euro gains after nomination of new Italy PM
The euro rose against the dollar in Asia on Monday after former EU commissioner Mario Monti was nominated to be Italy's next prime minister, raising hopes of a breakthrough in tackling Europe's debt crisis.
The common currency stood at $1.3771 in Tokyo trade, up from $1.3739 in New York late Friday. It also firmed to 106.21 yen from 105.97 yen. The dollar was unchanged at 77.12.
Monti was tapped Sunday to replace Silvio Berlusconi as head of a new technocratic cabinet in Italy, tasked with battling a crippling crisis in the eurozone's third largest economy.
The exact composition of the cabinet is set to be unveiled in the coming days ahead of a confidence vote in parliament that will formally give it power.
Italian lawmakers on Saturday approved a package of economic reforms that Berlusconi set as the precondition for his resignation amid global market turmoil.
"After Italy was closely in focus last week, the news gave some relief to the market as uncertainty over the political situation receded," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.
Fears grew last week that Italy could be the next eurozone economy to be forced to seek a bailout after yields on its 10-year bonds topped the seven percent level seen as unsustainable for the country to service its huge debt.
HiFX Senior Trader Stuart Ive told Dow Jones Newswires: "Sentiment is definitely buoyed by the fact that something constructive has happened over the weekend.
"At this point in time Berlusconi has gone but we don't know what the IMF (International Monetary Fund) and what the ECB (European Central Bank) will find when they start going through the Italian accounts."
If Italy can make a smooth start with its new interim government, the market's focus could swing back to what role the ECB and European Financial Stability Facility will play in coming months, UBS FX strategists said.
"There is still room to move on interest rate cuts, which could yet prove another form of stimulus," they added.
Also positive for the euro was the launch on Friday of a new government in Greece, headed by the ECB's ex-deputy chief Lucas Papademos, after a historic power-sharing deal between the country's main rival parties.
But the euro will likely remain choppy against the yen as the new Italian and Greek prime ministers attempt to navigate local politics, a senior dealer at a major Japanese bank said.
"What matters is whether they can implement the strict austerity measures," the dealer said. The dollar was mostly lower against other major Asian currencies.
It sagged to 1,119.15 South Korean won from 1,123.50 on Friday, to Sg$1.2816 from Sg$1.2883 and to 30.76 Thai baht from 30.81.
The unit also fell to 8,953.30 Indonesian rupiah from 8,990.00 and to 43.20 Philippine pesos from 43.30, while it was almost at Tw$30.16 compared with Tw$30.13.
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