Oct. 12 (Bloomberg) -- The euro approached a three-week high versus the dollar before European Commission President Jose Barroso presents proposals on bank recapitalization after Germany and France pledged to draw up a plan by early November.
The shared currency was 0.3 percent from the highest since Sept. 21 against the yen as European Union and International Monetary Fund officials indicated Greece will get an 8 billion- euro ($10.9 billion) loan next month, saying the nation has made “important progress.” South Korea’s won fell from a two-week high after a government report showed foreign direct investment in the country fell last quarter.
“The market is definitely putting its faith in the ability of the euro-area authorities to have something concrete in place by the end of the month and that is helping support euro,” said Emma Lawson, a currency strategist at National Australia Bank Ltd. in Sydney.
The euro traded at $1.3651 at 8:19 a.m. London time from $1.3640 yesterday, after rising to $1.3699 on Oct. 10, the strongest level since Sept. 21. The currency was at 104.69 yen from 104.55 yen, after reaching 104.99 yen on Oct. 10. The dollar bought 76.68 yen from 76.65 yen.
Barroso said yesterday he hoped the European Commission’s proposals would be an “important contribution for the European Council and the euro-area summit on Oct. 23.”
Greek Finance Minister Evangelos Venizelos said the government will meet commitments to international creditors to deepen pension and wage cuts, promising parliamentary approval for the draft 2012 budget, which was passed at the finance committee level yesterday.
Gains in the euro were tempered as Slovakia’s opposition leader said lawmakers must find a way to approve Europe’s enhanced bailout fund, which was rejected yesterday amid a dispute over the future of Prime Minister Iveta Radicova. Slovakia is the only euro-area country yet to approve the plan.
The won snapped a three-day gain versus the dollar as the Ministry of Knowledge Economy said foreign direct investment in the country dropped 24.6 percent from a year earlier to $2.21 billion, the first decline in a year.
“The markets are swinging back and forth in tandem with progress or setbacks in Europe’s plans to stem the crisis,” said Park Joo Hyung, a Seoul-based currency dealer at Korea Exchange Bank. “The Slovakia rejection threw cold water on sentiment again. This, together with importers’ dollar demand, is driving the won lower.”
The won weakened 0.2 percent to close at 1,166.85 per dollar after advancing to 1,160.80 yesterday, the strongest since Sept. 23.
--With assistance from Candice Zachariahs in Sydney. Editors: Nicholas Reynolds, Mark McCord
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