* Euro helped by banks repatriating funds, Draghi comments
* Yen weakest major currency this year
* Swedish crown rises after strong retail sales
NEW YORK, Dec 30 The euro rose broadly on
Monday, driven by euro zone banks drawing back foreign-held
assets before year-end and the European Central Bank chief's
comment that there was no urgent need to cut rates.
The euro's strength this year has baffled many commentators
and investors, who had expected tough economic conditions in
some member states to weigh on the single currency.
However, it has been boosted by euro zone banks repatriating
funds ahead of the year-end to shore up their capital bases
before an ECB Asset Quality Review (AQR), and repaying cheap
crisis loans to the ECB, which tightens liquidity.
Also helping the currency were comments from ECB President
Mario Draghi, who said in an interview with German news magazine
Spiegel published on Saturday that he sees no urgent need to cut
the euro zone's main interest rate further and no signs of
"The comments were supportive of the euro in otherwise
eventless trading activity. Capital flows and elevated money
market rates continue to support the euro as well," said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange in
The euro was up 0.5 percent against the dollar at
$1.3814, having shot up as high as $1.3892 in thin year-end
trade on Friday, its highest since October 2011. It has risen
more than 4 percent against the dollar in 2013 and is set for a
second straight year of gains.
The euro was 0.5 percent up against the yen at
145.10 yen, having hit a five-year high of 145.675 yen on
Friday, with the Japanese currency weighed down by expectations
the Bank of Japan will announce more money printing.
Many commentators think the euro could weaken early in 2014
once the AQR is out of the way.
"We remain sceptical of euro strength and will be watching
funding rates in the first days of the new year for signs that
the liquidity squeeze which supported the euro mid-December is
continuing to fade," said BNP Paribas analysts in a note.
The euro was down 1.1 percent against the Swedish crown at
8.8584 crowns after November retail sales in Sweden rose more
The dollar hit 105.415 yen, its highest level since
October 2008, in Asian trading but gave back gains to trade
marginally lower at 105.07 yen, down 0.1 percent on the
The yen has been the weakest major currency this year,
weighed down by the BOJ's pledge to keep interest rates low.
The dollar has gained 21 percent against the Japanese
currency while the euro, the strongest major currency in 2013,
has risen 26 percent.
Morgan Stanley head of global currency strategy Hans Redeker
cited the Bank of Japan's plans to increase its balance sheet
and Japanese investors buying euro zone government bonds as
weighing on the yen.
But he added: "It's a very thin marketplace, so it only
needs a bit of liquidity to take the market into some type of
significant price action."