TOKYO, Dec 7, 2011 – The euro firmed against other major currencies in Asia on Wednesday ahead of a crucial European Union summit that will focus on hammering out a plan to contain the eurozone debt crisis.
The unit fetched $1.3422 and 104.34 yen in afternoon trade, compared with $1.3397 and 104.14 yen in New York late Tuesday.
The dollar bought 77.73 yen, compared with 77.70 yen.
The euro will likely be volatile as investors watch for the latest news on Europe’s fiscal problems in the lead up to the two-day summit starting Thursday, dealers said.
“Since the region is clearly in a crisis mode, it might be easy for leaders to persuade the public to accept some breakthrough measures,” said one senior dealer at a major Tokyo bank.
Hideyuki Ishiguro, supervisor of investment strategy at Okasan Securities, said that “it’s unknown how the summit will go, but so far we see signs that eurozone nations are working together.”
“That’s giving the market some sense of relief,” he added.
The summit is seen as crucial to tackling the debt crisis threatening the eurozone and the future of the bloc’s single currency.
A call by French President Nicolas Sarkozy and German Chancellor Angela Merkel to set uniform tough budget standards across the eurozone raised hopes the region’s leaders will finally agree on a solution.
The pair backed automatic sanctions against member states whose budget deficits rise above three percent of gross domestic product.
Adding to the urgency of the meeting Standard & Poor’s said it was putting almost all eurozone countries, as well as the bloc’s 440 billion euro ($590 billion) bailout fund, on review for a possible credit downgrades.
The dollar was mostly lower against other Asian currencies, easing to 1,127.25 South Korean won from 1,130.70 Tuesday, to Tw$30.17 from Tw$30.20, and to 43.34 Philippine pesos from 43.40.
It also fell to Sg$1.2827 from Sg$1.2845 and to 30.79 Thai baht from 30.87, while staying flat at 9,080.00 Indonesian rupiah.
— Dow Jones Newswires contributed to this story —