* Euro creeps back over $1.3300 after hitting $1.3267
* Dollar backs away from two-month high vs yen
* Euro zone leaders agree Greece safety net to include IMF
By Kaori Kaneko
TOKYO, March 26 (Reuters) - The euro edged up from a
10-month low after euro zone leaders agreed on a safety net for
Greece which included the IMF, and the dollar backed off a
two-month peak on the yen as Japanese exporters sold into its
gains.
Euro zone leaders agreed on a joint European-IMF financial
safety net for debt-stricken Greece after weeks of wrangling.
Under the agreement, Greece would receive coordinated bilateral
loans from its euro zone partners and IMF assistance if it faced
severe difficulties. []
Dealers said the market was still digesting the significance
of the package, although the drawn-out debate and inclusion of
the International Monetary Fund in the solution dented the image
of the euro zone as able to handle its own problems.
The euro could have rebounded more given the accumulation of
short positions but its gains were limited as the agreement
between EU leaders was not strong enough to eradicate market
worries, and concerns also persisted on other euro zone nations
which are burdened with heavy debts, they said.
"The market has known that there would be some kind of a
rescue for Greece eventually. But the euro zone leaders'
agreement still lacks details and the market is unconvinced
Greece can manage its fiscal reconstruction," said Daisuke
Karakama, a market economist at Mizuho Corporate Bank.
Others said the IMF's involvement with Greece could speed up
the country's fiscal reconstruction, although some said there
was a risk that extremely strict conditions would harm the Greek
economy.
Athens is saddled with borrowing costs more than double
those of Germany and must borrow some 16 billion euros ($21.27
billion) between April 20 and May 23 alone to refinance maturing
debt.
After the euro broke below the psychologically key level of
$1.35 its fall began to accelerate and it could still drop as
far as $1.30 against the dollar, traders said.
"The rescue news for Greece is positive but as the euro
didn't really rise even after news of the IMF's involvement,
that seems to show what's happening now is broad dollar buying
more than anything else," said a trader at a Japanese bank.
The euro rose 0.5 percent from late U.S. levels to $1.3340
<EUR=> after hitting its weakest level since early May at
$1.3267 on trading platform EBS.
A trader at a European bank said the single currency had
scope to recover to a maximum of about Thursday's high around
$1.3380-1.3400 <EUR=> after the euro zone agreement on Greece,
largely because it has fallen so sharply in the past week.
The dollar index <.DXY>, a measure of its performance
against six other major currencies, hovered just below a
10-month high of 82.877 after gaining sharply in the past few
days on higher U.S. yields.
It struck its highest level since early January against the
yen on Thursday at 92.96 yen <JPY=>, but trickled back to 92.54
in early Friday trade.
"Exporters are ready to sell anywhere around these levels on
dollar/yen, though selling shouldn't be as big as yesterday,"
the trader said.
He said the next target for the dollar was about January's
high of 93.78 yen, although with exporters ready to sell,
reaching there could take some time.
Market players also started looking to the U.S.jobs report
for March due next week, which would indicate whether the dollar
will continue to rise or if its recent gains are only temporary,
traders said.
Meanwhile, higher-yielding currencies were holding firm with
the Australian dollar up 0.3 percent at $0.9105 <AUD=D4> and the
New Zealand dollar rising 0.5 percent at $0.7075 <NZD=D4>.
($1=.7523 Euro)
(Additional reporting by Aiko Hayashi, Charlotte Cooper;
Editing by Michael Watson)
