FILE PHOTO: Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, January 21, 2016. REUTERS/Jason Lee/Illustration
March 29, 2022
By Stefano Rebaudo
(Reuters) – The euro edged higher on Tuesday in cautious trading as Ukrainian and Russian negotiators prepared to meet in Turkey for the first direct talks in more than two weeks.
The U.S. dollar was slightly lower, just off its highest since May 2020, while the yen staged a modest rebound after crashing to its lowest level since August 2015 on Monday.
Any step towards a ceasefire or a potential peace deal would support the single currency as the euro area is seen suffering the most significant economic impact of the conflict.
Ukraine and the United States hold little hope of a breakthrough at the meeting later on Tuesday, even though Russia’s invasion appeared to have stalled on several fronts.
The euro was up 0.2% at $1.1003.
“Unless there is positive news from the negotiations between Ukraine and Russia, EUR will continue to struggle climbing back above the 1.10-mark against USD on a sustainable basis,” You-Na Park-Heger, foreign exchange analyst at Commerzbank, said in a research note to clients.
Versus a basket of currencies, the dollar was down 0.2% at 98.924, not far from its highest level since May 2020 at 99.415.
The greenback fell 0.3% to 123.57 against the yen after rising to its highest level since 2015 on Monday, while it’s set for its biggest monthly rise since November 2016.
Japanese Finance Minister Shunichi Suzuki said the government would closely watch currency moves to prevent a “bad” weak yen that hurts the economy.
“While the comments from Japanese officials overnight are unlikely to reverse the yen weakening trend on their own, they should at least help to slow the recent fast pace of yen selling”, Lee Hardman, currency and emerging market analyst at MUFG, said in a note to clients.
The Bank of Japan on Tuesday kept up its relentless quest to defend a key yield cap by offering to buy unlimited amounts of 10-year government bonds, putting even more downward pressure on the yen.
China’s offshore yuan was little changed against the greenback at 6.3831 after new pandemic restrictions in Shanghai. It hit its lowest since October 2021 at 6.4106 in mid-March.
Shanghai, China’s most populous city, tightened the first phase of a two-stage COVID-19 lockdown, asking some residents to stay indoors.
Bitcoin was down 1% at $47,482 after hitting its highest level since early January on Monday. Ether, the world’s second-largest cryptocurrency, was up 2% at $3,405.
(Reporting by Stefano Rebaudo; Editing by Emelia Sithole-Matarise)
