TOKYO: The euro edged up in Asia on Wednesday, supported by positive expectations over the European Central Bank's second batch of low-interest loans to eurozone banks.
The single currency fetched $1.3482 in Tokyo afternoon trade, compared with $1.3466 in New York late Tuesday. Against the yen, the euro was unchanged at 108.34.
"There is a strong sense of anticipation," a senior trader at a major Japanese trust bank said as the market awaited a flood of new loans to eurozone banks from the ECB's long-term refinancing operation (LTRO).
The bank, in the second such operation in two months, is offering to lend as much money as eurozone banks want at a rock-bottom interest rate of 1.0 percent for a period of three years.
The operation is aimed at averting a credit squeeze in the 17-nation single-currency area.
In late December, 523 banks obtained 489 billion euros in the first LTRO instalment.
According to ECB president Mario Draghi, the amount borrowed in the second operation could be close to that level.
The Japanese trust bank trader said the common currency may rally if the loan amount is larger than expected.
Such an influx of liquidity can encourage investors to turn toward assets deemed riskier, such as the euro, and away from currencies currently seen as safe havens, such as the dollar and yen.
In Tokyo trade the dollar slightly declined to 80.34 yen from 80.45 yen.
In early trading, the greenback got support from comments by Federal Reserve official Sandra Pianalto that the outlook for the US economy has become a "little more" encouraging, said Kengo Suzuki, forex strategist at Mizuho Securities.
The market was watching Fed Chairman Ben Bernanke's presentation of the Monetary Policy Report to the US House Financial Committee later in the day for fresh cues.
The dollar was lower against other Asian currencies, sliding to 1,118.24 South Korean won from 1,126.50 won Tuesday, to 42.72 Philippine pesos from 42.80 pesos and to Sg$1.2468 from Sg$1.2533.
It also declined to 9,096.88 Indonesian rupiah from 9,148.12 rupiah, to 30.25 Thai baht from 30.41 baht and to Tw$29.40 from Tw$29.59.
Dow Jones Newswires contributed to this article.
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