Euro rises versus dollar as Greek debt fears ease

AP News
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Posted: Jun 17, 2011 1:32 PM
Euro rises versus dollar as Greek debt fears ease

The euro gained ground against the dollar Friday as hopes grew for a bailout deal for Greece and fears eased that the country would default on its debt.

A meeting between German Chancellor Angela Merkel and France's President Nicolas Sarkozy ended with a pledge to get a deal for a second bailout in place as soon as possible.

UBS currency strategist Chris Walker said it seems Germany is starting to soften its insistence on having private sector creditors involved in a second bailout for Greece.

"Markets are currently taking this as a positive step," Walker said in a note to clients.

Investors and analysts believe that without a new aid deal, Greece will default on its debts next year after the current emergency loan package ends.

In afternoon trading Friday in New York, the euro rose to $1.4294 from $1.4141 late Thursday.

Also helping to boost the euro Friday was Greek Prime Minister George Papandreou's broad reshuffling of his cabinet. Papandreou replaced his finance minister in an effort to pass austerity measures that are needed to avoid a debt default.

In other trading Friday, the dollar fell to 80.16 Japanese yen from 80.78 and dropped to 0.8469 Swiss franc from 0.8504 Swiss franc. The British pound rose to $1.6157 from $1.6105.

The dollar was also trading lower against most other currencies around the world, including those in Australia, New Zealand, Hong Kong and Latin America.