Hopes of European debt plan boosts euro vs dollar

AP News
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Posted: Sep 27, 2011 4:24 PM
Hopes of European debt plan boosts euro vs dollar

The euro gained ground against the dollar Tuesday on speculation that European officials are preparing a plan to help resolve the region's debt crisis.

In late trading, the euro rose to $1.3641 from $1.3472 late Monday.

British newspapers reported over the weekend that officials have been working on a comprehensive plan that would include recapitalizing banks, increasing the bailout fund and trying to stop the crisis from spreading to other countries. European leaders have tried to play down rumors that such a plan is in the works, but investors are still hopeful.

"The market realizes that if the Europeans are serious about ending their sovereign debt crisis once and for all _ and it certainly sounds like they are _ they need to announce a major bailout plan in the very near future," said Kathy Lien, director of currency research at GFT.

Greece's finance minister also gave the euro a boost on Tuesday when he said that the country will be able to receive its next batch of bailout loans in time to avoid a default. The $11 billion payment is from last year's $150 billion bailout package. Without the money, Greece would face a default on its debt in the next month.

In other trading, the British pound rose to $1.5654 from $1.5530. The dollar fell to 0.8953 Swiss franc from 0.9056 Swiss franc. The dollar edged up to 76.75 Japanese yen from 76.49 yen.