Euro jumps against dollar, yen on Greek rescue offer

The euro rocketed to 1.3629 dollars in morning London trade, up from 1.3497 dollars in New York late on Friday.

Against the Japanese currency, the euro gained to 127.29 yen from 125.78 yen on Friday.

“The backstop provided by the support package for Greece is providing considerable support to the euro given improved clarity and a likely enhanced ability of Greece to finance itself in the market as a consequence,” said Credit Agricole analyst Daragh Maher.

“But there have to be questions over the durability of the bounce. How long will it be until the market focuses its attention on other weak fiscal stories within the eurozone?” he added.

Finance ministers from the countries that share the euro agreed Sunday on a three-year financing programme at interest rates of around five percent to help debt-laden Greece and restore confidence in the single currency.

The 30-billion-euro rescue package is intended as a back-up plan in case Greece is no longer able to raise funds to repay its debts and finance its budget on financial markets because of excessively high interest rates.

However, “the initiative for activating the rescue package rests with the Greek government and we’d be surprised if they didn’t use it in the absence of a sharp fall in borrowing costs,” said NAB Capital strategist John Kyriakopoulos.

In the days ahead of the agreement, the euro fell sharply and the yield on Greek 10-year bonds hit the highest level since 1998 amid persisting doubts about whether Athens’ eurozone partners would offer loans if needed.

“The euro is firmer as traders took heart from the Sunday announcement of the aid package for Greece,” said Daisuke Karakama, foreign exchange analyst at Mizuho Corporate Bank.

“But the gain could be short-lived as I can’t find many fresh factors from what’s written in the statement,” he added.

“The undertone of the euro’s weakness against the dollar probably won’t change for a while,” he said.

The IMF’s role in the unprecedented aid package for Greece is due to be the focus of talks starting on Monday.

EU Economic and Monetary Affairs Commissioner Olli Rehn said it would be for the IMF to disclose its precise share, but that “in principle” the split would be of the order of 2:1 for funding between the EU and the IMF.

An EU official said it would mean another 15 billion euros.

Dealers were also closely watching US data for clues on the recovery of the world’s largest economy, such as data on the retail sector due out this week, Karakama said.

In London on Monday, the euro was at 1.3629 dollars against 1.3497 dollars on Friday, at 127.29 yen (125.78), 0.8819 pounds (0.8775) and 1.4433 Swiss francs (1.4386).

The dollar stood at 93.39 yen (93.19) and 1.0590 Swiss francs (1.0658).

The pound was at 1.5452 dollars (1.5377).

On the London Bullion Market, the price of gold climbed to 1,163.60 dollars an ounce from 1,152.50 dollars an ounce on Friday.