Euro rises for fifth day as EU ministers meet on debt crisis

The euro strengthened for a fifth day versus the dollar on speculation European Union finance ministers meeting in Brussels will make further progress in their efforts to stem the debt crisis.

The 17-nation currency rose to a six-week high against the greenback after the officials said they were confident Greece’s bond buyback announced yesterday will be successful. The dollar fell for a second day versus the yen as President Barack Obama is scheduled for a television interview at 12:30 p.m. to discuss the so-called fiscal cliff of spending cuts and tax increases.

“There’s a bit more constructiveness out to the Eurozone,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, said in a telephone interview. “Currency markets could be subject to more headline trading, at least in this day ahead.”

The euro gained 0.3 percent to $1.3091 at 9:05 a.m. in New York after rising to $1.3107, the highest level since Oct. 18. The shared currency dropped 0.2 percent to 107.17 yen. The dollar fell 0.5 percent to 81.86 yen.

Brazil’s real rose 0.7 percent to 2.1098 per dollar after the central bank intervened yesterday to bolster the currency. The nation’s swap rates fell for a third day as industrial production expanded in October less than forecast, adding to speculation borrowing costs will stay at record lows through the first half of 2013.

Gain Limits

Further gains in the euro may be limited as the 14-day relative strength index versus the dollar rose to 70.2. A reading higher than 70 indicates a currency’s rally may have been too far, too fast and may be due for a correction.

EU finance ministers meeting in the Belgian capital will discuss setting up a common bank supervisor. Greece yesterday offered to spend as much as 10 billion euros to buy back bonds. French Finance Minister Pierre Moscovici said the operation “seems to be happening under satisfactory conditions.”

Spain’s Economy Ministry said yesterday that the nation would receive 37 billion euros next week to recapitalize four of its banks.

“We’re in a period of stability for the euro, which global policy makers’ actions have helped to restore,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The Greek buyback has helped to reinforce the tightening in euro-zone sovereign-credit risk premiums we’ve seen over the past couple of weeks.”

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