Tags: euro | italy | imf | loan | euro | crisis

Euro Climbs on Report of IMF Italy Loan Plan

Sunday, 27 Nov 2011 05:15 PM

The euro rose after Italian daily La Stampa said the International Monetary Fund is preparing a 600-billion euro ($794 billion) loan for Italy in case the debt crisis worsens, without saying where it got the information.

The 17-nation currency also advanced against the yen as Germany Finance Minister Wolfgang Schaeuble urged fast-track treaty changes to tighten budget discipline. The Australian dollar advanced as optimism a solution may be found for the euro-area’s debt woes boosted demand for higher-yielding currencies. New Zealand’s dollar, also known as the kiwi, climbed after Prime Minister John Key was re-elected with his party’s biggest mandate in 60 years.

“It does appear that these sort of noises would give the European Central Bank the cover it needs to implement a policy where it is essentially able to be a lender of last resort via IMF packaging, and in conjunction with a stability pact in Europe,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The spike will come in currencies like the Aussie dollar if there’s some credence in it, and the euro can rally somewhat as well.”

The euro rose 0.6 percent to $1.3322 as of 6:31 a.m. in Tokyo from $1.3239 on Nov. 25, when it completed a 2.1 percent weekly decline. The shared currency climbed 0.4 percent to 103.35 yen. The greenback fetched 77.57 yen from 77.73 yen.

Australia’s dollar rose 1 percent to 98.07 U.S. cents and New Zealand’s currency climbed 1.3 percent to 75.01 cents.

The IMF money would give Italy’s Prime Minister Mario Monti 12 to 18 months to implement policy changes without having to refinance the country’s existing debt, the Italian daily reported. Monti could draw on the money if his planned austerity measures fail to stop declines in Italian debt, La Stampa said.

Italy would pay an interest rate of 4 percent to 5 percent on the loan, the newspaper said. The amount could vary from 400 billion euros to 600 billion euros, La Stampa said.

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The euro rose after Italian daily La Stampa said the International Monetary Fund is preparing a 600-billion euro ($794 billion) loan for Italy in case the debt crisis worsens, without saying where it got the information.The 17-nation currency also advanced against the yen...
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2011-15-27
Sunday, 27 Nov 2011 05:15 PM
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