Comments by ECB Head Weigh on Euro

By: Barbara Zigah

In Asian trading, the Euro remained close to an 11-month trough following comments made by the head of the European Central Bank which dashed any hopes that they would take on a greater role in the resolution of the Eurozone debt crisis. As reported at 12:29 p.m. (JST) in Tokyo, the Euro was trading against the U.S. Dollar at $1.3003, rebounding off a session low of $1.2983 but within striking distance of $1.2944 which was struck last week. Analysts say resistance is pegged at $1.3090.

The comments were not entirely unexpected, however; Mario Draghi reaffirmed the bank’s position that it would not ceaselessly continue to buy troubled sovereign debt, nor would it step into the role of lender of last resort that most market players want. Mr. Draghi further said that the Eurozone’s leaders must consider the threat of a possible break-up of the Euro but strive against one by all means. He repeated the bank’s position that the bailout mechanism, once fully activated, could be made more useful by bolstering its capacity.

The E.U.’s finance ministers also reported that they have agreed in principle to provide an additional €150 billion to the International Monetary Fund so that their resources can be boosted in the event the Eurozone crisis escalates. The vote for the IMF funding increase must now go to the E.U. Parliament; however the United Kingdom has already threatened to veto the proposal.