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Euro stays weak in Asia after ECB disappointment

03 august 2012, 18:38
The euro stayed bearish against other currencies in Asia trade Friday after taking a hit from the European Central Bank's announcement of no immediate measures to fight the debt crisis, AFP reports.

The euro bought $1.2174 and 95.12 yen in Tokyo morning trade, compared with $1.2178 and 95.26 yen in New York late Thursday. The dollar was also flat at 78.22 yen.

The euro tumbled Thursday after the head of the European Central Bank (ECB), Mario Draghi, announced no immediate measures to ease debt pressures in the eurozone and only the bank "may" resume bond purchases.

The markets had wanted more from him after he raised expectations last week by saying the bank would do "whatever it takes" to preserve the embattled single currency.

"The ECB disappointed markets," said Credit Suisse analyst Hiromichi Shirakawa.

"It was obvious that Germany would oppose" providing fiscal assistance to troubled countries, he said in a note.

"The ECB gave fuel the flames of markets. It should put out the fire by itself," Shirakawa said, arguing the bank cannot help avoiding a rate cut and quantitative easing through purchasing long-term sovereign bonds.

After a one-day policy meeting Thursday the ECB left its key benchmark interest unchanged at 0.75 percent.

Draghi said the bank "may consider" further measures to bring markets under control as borrowing costs in Italy and Spain spiked back near levels that forced Greece, Ireland and Portugal to seek a bailout.

But he insisted the onus was on eurozone governments, saying they must carry out promised reforms and that the bailout fund must also intervene in the market to calm volatility.

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