FOREX-Euro gains on Greece plan but doubts remain

* Euro gains 0.9 pct vs dollar, recovers from 10-month low

* Euro zone leaders agree Greece safety net, includes IMF

* Uncertainties remain; euro down 12 pct vs dlr since Dec

(Adds quotes, updates prices)

By Jessica Mortimer

LONDON, March 26 (BestGrowthStock) – The euro lifted off a 10-month
low against the dollar on Friday after euro zone leaders agreed
on a safety net for Greece, though uncertainties remained over
how Athens’s debt burden would be managed in practice.

Euro zone leaders agreed a package under which Greece would
receive both bilateral loans from euro zone partners and
International Monetary Fund funding if it faced severe
difficulties. [ID:nLDE62N2R1]

But the plan did not alleviate longer-term worries about
Greece and other fiscally vulnerable economies, such as Portugal
and Spain, limiting euro gains. It only offers Athens funding as
a last resort and only with unanimous euro zone approval.

“This buys the euro a bit of time, but nothing fundamental
has changed and Greece still has to roll over its debt,” CMC
Markets analyst Michael Hewson said.

“The fact that the IMF has had to be called in to make it
more acceptable to Germany suggests the euro has a long way to
go before it becomes a reserve currency.”

Athens is saddled with borrowing costs more than double
those of Germany and must borrow some 16 billion euros ($21.3
billion) between April 20 and May 23 to refinance maturing debt.

At 1127 GMT, the euro (EUR=: ) was up 0.9 percent against the
dollar at $1.3393, recovering after hitting its weakest level
since early May at $1.3267 on trading platform EBS.

Concerns about Greece’s fiscal health have caused the single
currency to lose around 12 percent of its value versus the
dollar since early December, when it was trading above $1.51.

Hewson said the previous support around $1.3480 — the 61.8
percent retracement of last year’s move from the March lows
below $1.30 to the December highs — had become a significant
resistance level.

A weekly close below here would “reinforce a downside trend
in euro/dollar, potentially taking it down towards $1.3000”.


Traders said investors were encouraged after European
Central Bank President Jean-Claude Trichet said the aid
mechanism was “workable” although it was unlikely ever to be
activated. [ID:nLDE62O2MJ]

Some analysts said the IMF’s involvement could speed up
Greece’s fiscal reconstruction, although others said the deal’s
extremely strict conditions could harm the Greek economy.

“Going forward the market will be focusing more on whether
Greece will be able to deliver the austerity measures it has
promised,” said Johan Javeus, currency strategist at SEB in

Against the yen, the euro rose (EURJPY=R: ) around 0.8 percent
to touch a one-week high of 124.02 yen, while it gained 0.6
percent against sterling (EURGBP=D4: ) to 90.12 pence.

The dollar index (Read more about the global trade. ) (.DXY: ), a measure of its performance
against six other major currencies, fell 0.5 percent to 81.692,
still close to a 10-month high of 82.877 after gaining sharply
in the past few days on higher U.S. yields.

The dollar struck its highest level since early January
against the yen on Thursday at 92.96 yen (JPY=: ), boosted by a
rising differential between U.S. and Japanese yields, but
trickled back on Friday to trade down 0.2 percent at 92.54.


FOREX-Euro gains on Greece plan but doubts remain