By Candice Zachariahs and Monami Yui - Nov 7, 2011 7:07 AM GMT+0700
The euro halted a decline from last week against the dollar after Greek Prime Minister George Papandreou stepped down to allow the creation of a national unity government to secure international financing before the nation runs out of money next month.
The 17-nation currency ended a drop versus the pound after Papandreou worked to close the agreement on a new government before markets opened today. The Australian and New Zealand dollars climbed on speculation the Greek accord will boost demand for higher-yielding assets. The franc slid against the euro after the Swiss National Bank signaled it’s ready to act if the currency’s strength threatens Switzerland’s economy.
“For now it removes the risk of some sort of disorderly Greek default,” Mike Burrowes, a currency strategist at Bank of New Zealand Ltd. in Wellington, said of the reports on Greece’s government. “The news will keep currencies like the euro, Aussie and kiwi supported.”
The euro traded at $1.3794 as of 9:05 a.m. in Tokyo from $1.3792 Nov. 4 in New York, when it completed a 2.5 percent weekly slide. It dropped 0.1 percent to 107.82 yen and fetched 86.01 pence after losing 0.2 percent Nov. 4. The dollar dropped 0.1 percent to 78.15 yen.
Australia’s currency rose 0.3 percent to $1.0403, and the New Zealand dollar advanced 0.4 percent to 79.69 U.S. cents.
Franc Depreciation
Papandreou met with Antonis Samaras, the leader of the main opposition party, and “agreed to form a new government with the aim of leading the country to elections immediately after the implementation of European Council decisions on October 26,” according to an e-mailed statement from the office of President Karolos Papoulias in Athens. Papandreou has already said he won’t lead this new government, the statement said.
Both sides will gather again today to decide who will be the head of the government with a separate meeting to discuss the timeframe and the new administration’s mandate, the statement said. Papoulias will host a meeting of all party leaders as well.
The franc weakened against all of its 16 major counterparts after SNB President Philipp Hildebrand said the central bank expects Switzerland’s currency “to depreciate further.”
“Should that not be the case, it could lead to deflationary developments and weigh heavily on the economy,” Hildebrand said to the NZZ am Sonntag newspaper in an interview conducted Nov. 2 and published yesterday. “We are ready to take further measures in case economic prospects and a deflationary development should require it.”
The franc fell 0.6 percent to 1.2276 per euro and declined 0.6 percent to 88.98 centimes versus the dollar.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
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