Euro firms on risk appetite

TOKYO: The euro edged up against the dollar and yen in Asia on Wednesday as funds flowed to riskier currencies amid speculation of easing monetary policy in China, traders said.

The euro fetched $1.2781 and 97.98 yen in Tokyo afternoon trade, up from $1.2737 and 97.84 yen in New York late Tuesday.

The dollar eased to 76.67 yen from 76.82 yen in New York.

The euro was up on a local report that China's central bank had lowered reserve requirements for some banks, spurring buying in riskier currencies, traders told Dow Jones Newswires.

China said Tuesday its economy expanded 9.2 percent last year, a healthy figure but slower than a 10.4 percent expansion in 2010 as global turbulence and efforts to tame high inflation put the brakes on growth.

The euro will likely remain under pressure as Greece resumes talks on debt restructuring and Portugal tests investor confidence with a bond sale later Wednesday, said Masafumi Yamamoto, chief FX strategist at Barclays Capital in Tokyo.

A possible Greek default presented a "negative risk" for the common currency, he noted. "I am not optimistic on the situation," Yamamoto said.

Credit Suisse said the euro's bottom against the yen had yet to be seen.

"Policy options (for Japan) would be euro-buying intervention and additional credit easing by the Bank of Japan, and the possibility of the former is increasing," it said in a note.

Athens and its bankers are to explore on Wednesday and Thursday ways of cutting 100 billion euros ($128 billion) from a total of more than 350 billion euros in debt that is crushing the country's finances.

The dollar was weaker against other Asian currencies.

The greenback edged down to 31.77 Thai baht from 31.81 on Tuesday, to Sg$1.2817 from Sg$1.2834, to 43.52 Philippine pesos from 43.66 and to 1,141.40 South Korean won from 1,145.40.

It also eased to 9,180.00 Indonesian rupiah from 9,197.25 and to Tw$29.95 from Tw$29.97.