The euro slipped in Asian trade Thursday on concerns Spain’s troubled banks may need a bigger bailout, while the greenback had a slight boost after moves by the US Federal Reserve to power the economy.
The euro dipped to $1.2664 and 100.83 yen in Tokyo morning trade from $1.2702 and 100.97 yen in New York late Wednesday.
The dollar edged up to 79.60 yen against 79.49 yen in US trading.
Markets are growing increasingly worried that an audit of Spanish lenders will show a recent multi-billion dollar loan to shore up the nation’s troubled banks may not be enough, said a senior dealer at a major Japanese bank.
“Our bank’s internal research shows Spanish banks have a huge amount of bad mortgage loans and real estate, so it’s possible that the audit will negatively surprise the market,” he told Dow Jones Newswires.
Earlier this month, Spain’s eurozone partners agreed to lend up to 100 billion euros to save a bank sector laden with bad loans extended during a real estate bubble that imploded in 2008.
On Wednesday, the US central bank extended a bond-swapping programme by six months, aimed at pushing down longer-term borrowing costs and stimulating the world’s biggest economy.
But the Fed provided no hint of further quantitative easing steps while saying it stood ready to do more to help the US economic recovery.
Any further upside for the dollar from the Fed’s move was limited, the bank dealer said.
Madrid is expected to transmit an official request for the bank aid.
