Euro recovers slightly after Monday's loss

Tokyo

THE euro edged up against the US dollar on Tuesday after plunging in the wake of the anti-austerity Syriza party's victory in Greek elections, while the ruble dropped after Standard & Poor's (S&P) cut Russia's debt rating to junk.

In Tokyo, the common currency rose to US$1.1241, from US$1.1234 in New York. The euro had tumbled to US$1.1098 - its lowest level since September 2003 - in Asia on Monday, owing to fears the poll result could lead to a Greek exit from the eurozone. The single currency eased to 132.85 yen from 133.12 yen in US trade, although it is still up from levels below 132 yen on Monday in Japan.

Victory for the far-left Syriza in Sunday's poll initially sparked fears Athens will refuse to stick to its bailout obligations and eventually leave the eurozone. The party had campaigned on renegotiating terms of the lifeline, which include major spending cuts and painful tax hikes. But "they don't seem to have what I'd view as a far-left goal - it's not like they're going to come out and default on all their debt", Matt Derr, a foreign-exchange strategist at Credit Suisse Group AG, told Bloomberg News. "The euro is getting a bit of a relief rally."

The euro also won a measure of support from a new poll on Monday that showed German businesses were confident about the outlook for Europe's biggest economy. The US dollar slipped to 118.23 yen from 118.49 yen as traders awaited the start of a two-day Federal Reserve policy meeting later in the day. Markets are keen for clues about any change in the timeline for an interest rate hike, currently expected around the middle of the year.

The ruble sank after a deadly rocket attack on Mariupol, Ukraine, by pro-Russian rebels raised the prospect of more Western sanctions on Moscow, while ratings agency S&P cut Russia's debt rating to junk. On Tuesday, the US dollar bought 67.73 rubles, up from 67.18 rubles the previous day.

The US dollar was mixed against other Asia-Pacific currencies. It strengthened to 44.15 Philippine pesos from 44.11 pesos on Monday, and to 61.45 Indian rupees from 61.43 rupees. The greenback weakened to NT$31.27 from NT$31.29, to 12,465 Indonesian rupiah from 12,510 rupiah, to S$1.3441 from S$1.3454, and to 32.57 Thai baht from 32.58 baht. It was also at 1,079.75 South Korean won against 1,079.53 won. The Australian dollar rose to 79.38 US cents from 78.80 cents. The Chinese yuan rose to 18.90 yen from 18.82 yen. AFP