March 22, 2013 / 7:47 AM / in 5 years

FOREX-Cyprus uncertainty weighs on euro, yen firms

* Cyprus uncertainty weighs on euro; yen edges higher

* Yen firms as investors seek safe haven

By Sophie Knight and Ian Chua

TOKYO/SYDNEY, March 22 (Reuters) - The euro was knocked lower and the safe-haven yen strengthened on Friday on news that Russia had refused to provide financial assistance to Cyprus, which is struggling to find a solution for its debt crisis.

The euro was last down 0.1 percent versus the yen at 122.28 yen, after having fallen to as low as 121.88 yen earlier.

Against the dollar, the euro held steady at $1.2903, having slipped to as low as $1.2888 earlier on Friday.

Cypriot Finance Minister Michael Sarris was due to fly home from Moscow on Friday after failing to win support in two days of crisis talks with Russia on prolonging a bailout loan or on a possible new financing package.

Cyprus needs to find 5.8 billion euros in new money by a Monday deadline if it is to receive a 10-billion-euro EU bailout to avert a collapse of its financial system that could push it out of the euro zone.

“Although Russia refusing a loan is not big news, the market is extremely nervy at the moment due to the lack of clarity around the Cyprus situation,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman.

“It’s also difficult to sell the yen with investors trying to cut their risk exposure ahead of the weekend, and also because hopes for easing were offset by Kuroda not giving any hints of an emergency meeting yesterday.”

The dollar fell 0.1 percent to 94.80 yen.

The greenback had slid about 1.2 percent on Thursday as investors covered their yen bearish bets after new Bank of Japan governor Haruhiko Kuroda stopped short of calling an emergency policy meeting ahead of the next scheduled policy review on April 3-4.

“Kuroda has repeatedly said he’ll do as much as he can to reach the 2 percent inflation target, so an emergency meeting seemed quite plausible for a lot of people,” said Makoto Noji, senior strategist at SMBC Nikko Securities.

“But what the market has really put its chips on is easing on a scale that exceeds what has been reported in the media. That means there is a lot of room for disappointment,” he added.

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