FOREX-Euro, sterling jump as Europe govts rescue banks

FOREX-Euro, sterling jump as Europe govts rescue banks
Mon Oct 13, 2008 7:39am EDT
* Euro pushes up after European govts agree to rescue banks
* Sterling also rallies as UK govt details bank bailout plan
* Stocks surge, panic selling arrested
* UK's Brown calls for remake of Bretton Woods pact
(Changes byline, releads, adds comment, updates throughout)
By Veronica Brown
LONDON, Oct 13 (Reuters) - The euro shot up on Monday, pulling away from a 1-1/2-year low against the dollar as a pledge by European governments to rescue banks from collapse plugged a deluge of selling in the single European currency.
Sterling also gained traction after the British government said three of the nation's biggest banks would take $64 billion in official funds to boost their capital [nLD69629].
According to a draft bill seen by Reuters on Monday, a rescue package for Germany's financial sector includes a fund to provide up 400 billion euros in guarantees for banks. Details of the plan were due at 1300 GMT [nLD220275].
The French government would create a $55 billion fund to take stakes in its banks, media reports said, as markets awaited the release of details for other European governments' respective bailout plans.
European shares were boosted, climbing more than 6 percent in early trade and maintaining most of the gain through the morning.
"The biggest change from today relative to last week is the fact that euro zone officials seem to have come up with a template plan from which national governments can pick and choose and implement where they see necessary," said Derek Halpenny, European Head of Global Currency Research at BTM-UFJ in London.
"We're certainly getting a greater shift towards the template used by the British government, which seems at the moment to be the best plan in town and the one investors are warming most to," he added.
In exchange for the UK government's fund injections, Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote,Profile, Research, Stock Buzz), and Lloyds TSB (LLOY.L: Quote, Profile,Research, Stock Buzz) would be required to lend to homeowners and small businesses at rates seen in 2007.
In addition, institutions would also have to limit executive pay and accept government input on new board appointments [nLD167263].
British Prime Minister Gordon Brown called for world leaders to come together to remake the Bretton Woods agreement to tackle a 21st century globalised financial system.
The Bretton Woods conference in 1944 helped draw up the post-war financial order and established the International Monetary Fund (IMF) and the World Bank.
The euro spiked as high as $1.3671 , according to Reuters data. Bourses in Tokyo and New York bond markets were closed for respective national holidays.
By 1122 GMT, the single currency had pared early gains but was still up 1.3 percent on the day at $1.3577, having hit a low as $1.3257 on Friday, its weakest since March 2007.
The euro also climbed against the yen, and was last up 1.1 percent at 136.53 yen and recovering from a tumble last week that took it to levels last seen in mid-2005.
Sterling jumped as high as $1.7278, pulling away from a five-year low around $1.68 hit on Friday.
The yen was sold broadly as investors cut long positions built up in the Japanese currency as part of trades to reverse carry trades that had used cheap, low-yielding yen funds to buy higher-yielding currencies.
Despite the dollar's losses against the euro, the U.S. currency recovered from early losses against the yen to trade at 100.49 yen, off a session low of 99.58 according to Reuters data.
JITTERS REMAIN
European shares were last trading 5-1/2 percent higher, with sentiment bolstered by the bank rescue packages after a drop of more than 20 percent last week.
Leaders from Group of Seven industrialised nations at the weekend set out a plan of action to deal with the ongoing meltdown in the banking sector.
The United States said it would take stakes in banks in a first such move since the Great Depression, and Australia said it would guarantee deposits in its banks. [ID:nCRISIS]
While the flurry of initiatives to contain the worst financial crisis since the 1930s may have stemmed waves of selling for now, analysts were uncertain whether the improving mood would last very long.
"With risk perception hitting yet another record high last week...it may take longer until investors' confidence is restored to its pre-crisis levels," Dresdner Kleinwort strategists said in a note to clients.
"New triggers of risk aversion like real sector defaults should abound as global economy heads into a recession going forward. Markets thus should remain jittery in the coming months," they added. (Reporting by Veronica Brown; Editing by Chris Pizzey)

RPT-FOREX-Yen falls, Aussie surges as bank rescues take shape

RPT-FOREX-Yen falls, Aussie surges as bank rescues take shape
Sun Oct 12, 2008 9:10pm EDT
(Repeats to additional subscribers)
By Eric Burroughs
TOKYO, Oct 13 (Reuters) - The yen slid against higher-yielding currencies on Monday while the Australian dollar surged as leaders from Europe to the United States rushed out plans to shore up banks and stem the panic gripping investors.
After stock markets around the world suffered their worst ever weekly losses last week, leaders from Group of Seven rich nations set out a plan of action to stem the crisis and European leaders agreed to inject public funds into the banking system if necessary. [ID:nLC713950]
The United States said it would take stakes in banks in a first such move since the Great Depression, while Britain was set to pump more than 40 billion pounds into its four biggest banks. [ID:nCRISIS] The flurry of initiatives to stem the worst financial crisis since the 1930s increased investor appetite for risk, though analysts were uncertain whether the improving mood would last very long.
"What is clear is that global policymakers are not going to stand idly by as the global financial system implodes," said Sue Trinh, senior currency strategist at RBC Capital Markets, in a note to clients.
In Asia, Australian and South Korean equities jumped 3-6 percent and U.S. stock futures SPc1 also rose, pointing to a sharp rally.
Reviving the lending between banks, the lifeblood of the global financial system, was at the heart of the rescue plans after the default of Lehman Brothers caused many financial institutions to stop dealing with each other.
Trading activity was subdued due to a national holiday in Japan and with U.S. bond markets closed for the Columbus Day holiday. U.S. stock markets will be open, however.
Weeks of severe market volatility have also made investors and hedge funds shy away from trading, making day-to-day moves even more extreme than usual.
The dollar slipped, giving up some of its gains scored in the past few weeks as U.S. investors repatriated funds and as banks around the world scrambled to acquire the dollar funding they needed on the open market.
The euro rose 1.2 percent from late U.S. trade to $1.3573 , recovering from a 1-½ year low of $1.3258 struck on Friday.
The single currency jumped 1.4 percent to 136.92 yen , up from a three-year low of 132.15 hit on Friday as well.
The dollar was little changed at 100.70 yen with most of the big moves concentrated in currencies that have suffered the most during the broad market sell-off of the past few weeks.
The Australian dollar gained 5.4 percent to $0.6774 after hitting a 5-½ year low of $0.6330 on Friday and plunging about 20 percent in the past two weeks.
Against the yen, the Aussie was up 5.4 percent to 68.20 yen after having collapsed more than 22 percent in the past two weeks to a six-year low near 63 yen. (Editing by Tomasz Janowski)

FOREX: Ringgit Ends Higher Against U.S. Dollar

FOREX: Ringgit Ends Higher Against U.S. Dollar


KUALA LUMPUR, Oct 13 (Bernama) -- The ringgit ended higher against the US dollar Monday in line with gains by other Asian currencies, dealers said.At 5pm, the ringgit traded higher at 3.4930/4970 compared with last Friday's closing of 3.5115/5145.Dealers said Asian currencies were buoyed by the rising stock market after an announcement by the Group of Seven (G7), that it would inject public funds into the banking system if necessary, to tackle the global financial crisis."The market reacted positively to the G7 announcement to contain the financial crisis.This spurred buying interest in the local market," a dealer said.In late trading today, the local currency traded mixed against other major currencies.It depreciated against the Singapore dollar at 2.3783/3837 from 2.3744/3785 last Friday while being firmer against the Japanese yen at 3.4704/4774 from 3.5391/5428 previously.The ringgit was stronger against the euro at 4.7616/7698 from 4.7809/7860 last Friday while it was lower against the British pound at 5.9947/6.0050 from 5.9481/9550 previously.