* Cyprus clinches last-ditch deal with international lenders
* Deal endorsed by euro zone finance ministers
* Euro may face short-term resistance near $1.3140 - analyst
By Masayuki Kitano
SINGAPORE, March 25 The euro rose on Monday
after Cyprus clinched a deal with international lenders for a 10
billion euro bailout aimed at saving the country from financial
The single currency rose 0.4 percent to $1.3040,
pulling away from a four-month low of $1.28435 set last Tuesday.
Against the yen, the euro climbed 0.7 percent to 123.60 yen
The deal for Cyprus, which was swiftly endorsed by euro zone
finance ministers, includes plans to shut down the country's
second largest bank in return for a 10 billion euro ($13
The plan involves winding down Popular Bank of Cyprus, also
known as Laiki, and shifting deposits below 100,000 euros to the
Bank of Cyprus to create a "good bank".
Deposits above 100,000 euros in both banks, which are not
guaranteed under EU law, will be frozen and used to resolve
Laiki's debts and recapitalise the Bank of Cyprus.
The agreement came hours before a deadline to avert a
collapse of the banking system in Cyprus. Until a deal was
reached, there had been concerns that Cyprus might have been
forced to exit the euro zone.
Analysts said the euro might rise to around $1.3100 to
$1.3150 in the near term as investors pare back bearish bets
versus the single currency.
However, they were sceptical that there would be a sustained
rally in the euro, given concerns about the euro zone's economic
"People are focusing on European growth and the structural
problems that are going to impede European growth," said Sim Moh
Siong, FX strategist for Bank of Singapore.
"We're starting to see a greater contrast between U.S.
growth and European growth. That contrast, I think, will
continue to weigh on the medium-term outlook for the euro," he
said, adding that the euro could face short-term resistance at
levels around $1.3140.
Technical charts show several resistance levels for the euro
in the $1.3130 to $1.3140 area including its 100-day moving
average at about $1.3132 and the euro's March 8 intraday high of
"I have regarded the problems facing Cyprus as being only a
short-term trading factor for the market," said Daisuke
Karakama, market economist for Mizuho Corporate Bank in Tokyo.
"I am sticking to the view that the euro will eventually be
dragged down due to its economic fundamentals," Karakama said.
The yen, which tends to rise in times of market stress,
retreated broadly as the worries over Cyprus eased, with the
dollar strengthening 0.4 percent to 94.82 yen.
Market expectations for the Bank of Japan to unveil
aggressive monetary stimulus at its next scheduled policy
meeting on April 3-4, the first under new BOJ Governor Haruhiko
Kuroda, are seen likely to support the dollar against the yen in
the near term.
Analysts say, however, that with expectations for drastic
BOJ monetary easing already running high, the dollar could face
a sell-on-fact type of reaction against the yen after next
With the yen pressured by the prospects for BOJ easing, the
dollar hit a 3-1/2 year high of 96.71 yen on March 12, marking a
gain of roughly 22 percent for the greenback compared with