TOKYO, May 11, 2010 (AFP) - The euro lost steam against other major currencies in Asia on Tuesday as worries over eurozone debt persisted despite a huge rescue package to remedy the immediate crisis, dealers said.
The single currency, which briefly soared above 1.30 dollars on the announcement of a near trillion-dollar rescue package Monday, bought 1.2718 dollars in Tokyo afternoon trade, from 1.2778 dollars in New York late Monday.
The euro's prospects were also hit by a warning from Moody's Investors Service that it may downgrade Portugal and lower debt-laden Greece's rating to junk status, after a similar move by Standard & Poor's which saw borrowing costs spike for Athens.
The debt crisis began as Greece teetered toward default, triggering fears that other weak economies such as Portugal, Spain and Italy may be next.
"The rescue package turned out to be bigger than expected, making credit fears recede for now," said Hideaki Inoue, a senior dealer at Mitsubishi UFJ-Trust and Banking Corp.
"But worries still linger, leaving few people willing to buy the euro aggressively," he said.
"The question is if (debt-ridden European) governments can exert leadership in pushing with austere measures."
Credit Suisse said in a note that "it is highly likely that speculative attacks on government bond markets of Greece, Portugal and Spain will calm down for now" with the rescue measure.
"But it is unlikely that the problem will be settled with this," it said, arguing there are no measures to improve the Greek solvency such as a cut in debt principals and other debt restructuring.
"Given its political and social situation, the possibility is very low" that Greece will achieve fiscal reform, it said.
The euro also fell back to 117.83 yen from 119.20 yen in New York. The dollar slipped to 92.61 yen from 93.30.
The British pound held firm at 1.48 dollars after Prime Minister Gordon Brown said he would resign as Labour leader and hold talks with the Liberal Democrats on forming a government after a general election ended in stalemate.
The dollar was mixed against Asian currencies.
The greenback fell to 45.01 Philippine pesos from 45.71 on Monday as Benigno Aquino was set to be confirmed as the next Philippine president Tuesday after national elections to pick a successor to Gloria Arroyo.
It also dropped to 9,090 Indonesian rupiah from 9,110 and held steady at 31.53 Taiwan dollars.
The dollar rose to 1,133.80 South Korean won from 1,131.80 and to 1.3809 Singapore dollars from 1.3779, while edging up to 32.31 Thai baht from 32.25.
mis/dan
Copyright AFP 2010.
