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Euro slips in Asia on Portuguese bank bailout

TOKYO, Japan - The euro slipped against the dollar in Asia on Monday following news of a bailout for a crisis-hit Portuguese bank, while the dollar held steady after falling on US jobs data.


Portugal's central bank announced late Sunday that the nation will inject 4.4 billion euros ($5.9 billion) into the Banco Espirito Santo (BES) amid fears of a catastrophic bank run.


The euro bought $1.3421 in Asia on Monday, down from $1.3430 in US trade late Friday, while fetching 137.80 yen against 137.75 yen.


The dollar was at 102.66 yen compared with 102.60 yen in New York on Friday.


The dollar slipped on Friday after US jobs data for July turned out to be solid but not strong enough to boost inflation expectations.


Stocks were lacklustre Monday, weighed down by concerns over the impact of stricter sanctions of Russia on European economies and the situation surrounding the BES, said Yoshihiro Okumura, general manager of research at Chibagin Asset Management.


"European risk is having an impact on the broader market," Okumura told Dow Jones Newswires.


BES, Portugal's third-largest banking group, will be split into two entities, with its toxic assets isolated and its healthier assets regrouped in a new Novo Banco, national bank governor Carlos Costa said late Sunday.


The market focus is now shifting to Thursday's monthly meeting of the European Central Bank (ECB), although it is widely expected to hold fire on new policy action despite a lingering threat of eurozone deflation and geopolitical risks.


"The ECB might be enjoying a summer lull, eventually, with no hints of new action expected" at the upcoming meeting, Credit Agricole said in a note.


The Bank of Japan (BoJ) is also scheduled to hold a two-day policy meeting later this week.


"The upcoming BoJ meeting is unlikely to result in any changes in policy. However, policymakers will have to outline their strategy for 2015 before it’s too long," Capital Economics said.

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