The euro advanced the most in seven months versus the dollar after Europe offered Greece a rescue package worth as much as 45 billion euros ($61 billion U.S.) at below-market interest rates.
The common currency strengthened against all its major counterparts as yields on Greek sovereign bonds fell on reduced speculation the nation will default. Australia’s dollar dropped from the highest level since November versus the greenback on evidence the nation’s housing market may weaken.
The euro increased as much as 1.4%, matching an intraday rally on Sept. 8, before trading at $1.3586 U.S., compared with $1.35 U.S. on April 9. The euro touched $1.3692, the highest level since March 18, and appreciated 0.9% to 126.93 yen, from 125.79. The dollar rose 0.3% to 93.50 yen, from 93.18.
After Greek borrowing costs surged to an 11-year high, euro-region finance ministers said they would offer as much as 30 billion euros in three-year loans in 2010 at about 5% interest. Another 15 billion euros would come from the International Monetary Fund. The three-year Greek bond yield fell 0.81 percentage point to 6.17% today.
Futures traders decreased bets that the euro will fall against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission showed last week.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 67,223 on April 6, compared with net shorts of 85,326 a week earlier.
The euro’s gains may prove to be temporary because the region’s economic recovery is slower than that of the U.S., according to some experts.
The euro will fall to $1.33 U.S. by the end of the year, according to the median estimate of 39 analyst forecasts compiled by Bloomberg News.
The won rose for a second day against the dollar as the Bank of Korea said gross domestic product will expand this year at the fastest pace since 2006. The economy will grow 5.2% in 2010, the central bank said today, raising its outlook from a December forecast of 4.6%. The currency rose 0.4% to 1,114.13 and touched 1,111.38, the most since September 2008.
Australia’s dollar fell for the first time in three days as the nation’s home-loan approvals fell in February more than economists forecast, signaling five interest-rate increases in six central bank meetings may be curbing demand. New Zealand’s currency retreated as the nation’s house prices declined in March for the first time in 10 months.
Australia’s currency weakened 0.5% to 92.83 U.S. cents after touching 93.89 cents, the highest since Nov. 16. New Zealand’s dollar decreased 0.6% to 71.52 U.S. cents.
