Euro rises as Cyprus seeks alternatives to EU bank bailout plan

The euro strengthened from a four- month low against the dollar as Cyprus sought alternatives to the European Union plan to help the nation avoid a banking collapse and the Federal Reserve maintained stimulus measures.

The dollar remained lower against the 17-nation currency after the Federal Reserve said it will continue buying $85 billion of bond per month as it seeks to reduce the unemployment rate that hasn’t fallen below 7% since November 2008. The euro rose after the European Central Bank’s pledge to provide liquidity to Cyprus gave the nation time to renegotiate a financial rescue and on speculation that Russia may provide aid. The yen fell against all of its 16 most-traded peers.

“I wonder if people are starting move beyond this a little bit, especially if they see something that says aid is possible from Russia, allowing them to bridge this gap,” Brian Kim, a foreign-exchange strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a telephone interview.

The euro advanced 0.6% to $1.2954 at 2:43 p.m. New York time, after sliding to $1.2844 yesterday, the weakest level since Nov. 22. The common currency strengthened 1.4% to 124.23 yen. Japan’s currency weakened 0.8% to 95.93 per dollar.

Peso Gains

Mexico’s peso rose versus most of its 16 major peers after policy makers signaled they will keep benchmark borrowing costs unchanged after cutting them earlier this month. The country isn’t planning measures to curb the peso’s gains this year, Deputy Finance Minister Fernando Aportela said March 17.

The peso rose 0.6% to 12.3682 per dollar, touching the strongest level since September 2011.

Hungary’s forint strengthened for a second day, and the most against the greenback of its 31 most-traded peers, amid speculation the country will avoid dramatic policy measures to help foreign-currency debtors.

The forint appreciated 0.2% to 304.85 per euro and 0.7% to 235.40 to the dollar.

South Africa’s currency fell for a second day as the country’s central bank kept its benchmark interest rate unchanged for a fourth meeting as a slump in the rand stoked inflation, preventing policy makers from providing further stimulus to spur economic growth.

The rand weakened 0.7% to 9.3065 per dollar and touched the lowest level since April 2009.

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