Euro holds firm before EU finance ministers meet
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The euro held firm against the dollar in Asia on Thursday, underpinned by expectations that European Union finance ministers would approve a boost in their firewall against future financial turmoil.
The euro bought $1.3317 and 110.04 yen in Tokyo morning trade, compared with $1.3316 and 110.36 yen in New York. The dollar edged down to 82.62 yen from 82.86 yen in New York.
Eurozone governments have debated whether to combine the lending capacity of the temporary European Financial Stability Facility, used to rescue Portugal, Ireland and Greece, with the permanent European Stability Mechanism.
"There is a high degree of complacency regarding the benefits of the long-discussed ESM and EFSF and the outlook for the European economy," National Australia Bank said in a note.
"We do believe the approval for the rescue package will go ahead tomorrow, and this may create more support for the euro in the interim, despite the fact that it probably was not in doubt," it said.
Senior dealers at major banks in Tokyo told Dow Jones Newswires that the euro's upside was capped by weaker shares in the region as traders looked for safer assets.
The eurozone is mulling temporarily raising the size of its debt rescue mechanism to 940 billion euros before lowering it, two European sources close to the discussions said Wednesday.
The proposal will be presented to finance ministers meeting on Friday and Saturday in Copenhagen to decide whether to increase the capacity of the firewall amid resurgent concerns about Spain's finances.
"One option which will be presented is that in the first year from mid-2012 to mid-2013 to have a firewall that goes up to 940 billion euros," a diplomat said, adding that the figure could then be brought down to 700 billion euros.
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