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Euro rebounds in Asia after falling on Spain downgrade

business Updated: May 31, 2010 07:56 IST

The euro rose against other currencies in Asia on Monday after market players adjusted positions following the single European unit's falls on a cut in Spain's credit rating, dealers said.

The euro bought $1.2306 in Tokyo morning trade, up from $1.2266 in New York late Friday. It also rose to 112.48 yen from 111.80 yen.

The dollar went up to 91.34 yen from 90.96 yen.

"There is no fresh news and position adjustment is going on" to push the euro up, said Mizuho Corporate Bank market economist Daisuke Karakama.

"I don't think the market view has changed. There are more people who want to sell (the euro) than those who want to buy," he said. "Many people are still waiting for opportunities to sell on rebounds."

Karakama added it was difficult to take aggressive positions with the London and New York markets closed Monday for holidays.

On Friday investors flocked to the safe haven dollar on renewed concerns about the European sovereign debt crisis after global rating agency Fitch downgraded Spain's credit status one notch from the maximum AAA to AA+.

Fitch feared Spain's economic growth would suffer as the country moved to slash its mounting debt, amid concerns that a wave of austerity measures introduced across the region will harm the eurozone's outlook.

However, a senior currency dealer at a major Japan brokerage said there was a sense that "the falls Friday were too exaggerated."

"So I think many investors were from the start today looking to make some adjustments by buying back," the dealer told Dow Jones Newswires.

Currency rates barely moved on political developments in Japan over the weekend or fresh economic data Monday, dealers said.

Japan's small socialist party Sunday walked out of the ruling coalition in a row over a US military base in the southern island of Okinawa, heaping pressure on embattled Prime Minister Yukio Hatoyama ahead of July elections.

Data on Monday showed Japan's industrial output rose by a smaller-than-expected 1.3 percent in April from the previous month.