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Euro Strengthens as Trichet Eases Concern Greece Will Default
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08:48AM
Source:SMM

LONDON, Apr. 9 -- The euro rose for a second day against the dollar and yen after European Central Bank President Jean-Claude Trichet said he doesn't expect Greece to default and it probably won't need financial aid from the European Union.

The 16-nation currency also pared weekly losses before a report that economists said will show German exports rose in February, boosting demand for the region's assets. The yen may decline, paring this week's gains, as stock futures indicated regional equities will rise.

"The comments from Trichet were quite supportive and we could see a bounce, but the underlying concerns will remain," said Derek Mumford, a Sydney-based senior consultant at HiFX, a foreign-exchange risk management firm. "There are more problems down the line which will keep interest rates low and pressure the euro."

The euro gained to 125.12 yen as of 8:37 a.m. in Tokyo from 124.75 in New York yesterday, when it strengthened 0.1 percent. The European currency advanced to $1.3383 from $1.3361. The yen traded at 93.51 per dollar from 93.38, headed for a 1.2 percent gain this week.

German exports, adjusted for working days and seasonal changes rose 4 percent in February, after dropping a revised 6.4 percent the previous month, according to a Bloomberg News survey.

‘Not An Issue'

"A default is not an issue for Greece," Trichet told reporters in Frankfurt yesterday, after the ECB left its benchmark interest rate at a record low of 1 percent. "I will only repeat that what is important is the measures that are taken and implemented by the Greek government and the Greek parliament."

Greece's first-quarter budget deficit fell 40 percent to 4.3 billion euros ($5.7 billion) from 7.1 billion euros in the same period a year earlier, Finance Minister George Papaconstantinou said in an e-mailed statement yesterday.

The euro is still headed for a week of declines against the dollar and yen on concern Greece will struggle to reduce its budget deficit, which stands at almost 13 percent of gross domestic product.

 

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