* Euro helped by banks repatriating funds, Draghi comments
* Yen weakest major currency this year
* Swedish crown rises after strong retail sales
By Laurence Fletcher
LONDON, Dec 30 The euro rose against the yen and
dollar 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 was 0.3 percent up against the yen at
144.89 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.
The euro was up 0.2 percent against the dollar at
$1.377, having shot up as high as $1.3894 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'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.
It was also supported by 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
"We're watching the economic hard data in euro land, which
has certainly weakened," said Hans Redeker, head of global
currency strategy at Morgan Stanley. "(But) the market is still
keen to believe those (Draghi's) type of words."
However, 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 0.6 percent down against the Swedish crown at
8.9016 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 stand
marginally down at 105.14 yen.
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's 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."