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FOREX-Euro slips as doubts about rescue package remain

Published 05/10/2010, 08:57 PM
Updated 05/10/2010, 09:28 PM

* Investors doubt package can fix root of euro zone debt woes

* Euro seen moving in $1.25-$1.31 range in near-term

By Rika Otsuka

TOKYO, May 11 (Reuters) - The euro slipped on Tuesday, giving back some gains made the previous day on news of a $1 trillion package to prevent the spread of the European debt crisis, as scepticism remains over Greece's ability to cut its large fiscal deficit smoothly.

The euro slid 0.6 percent to 118.44 yen, a day after jumping over 2 percent versus the Japanese currency. Against the dollar, the euro stood at $1.2770, down 0.1 percent from late U.S. trade on Monday.

"The emergency package is likely to ask Greece to adopt very demanding steps to cut its debt, leaving us with doubts over whether it will be able to implement such budget reform," said Tsutomu Soma, senior manager of the foreign securities department at Okasan Securities.

"The emergency package is effective in avoiding a near-term crisis. But so much uncertainty remains for the euro zone."

European Union financial ministers, central bankers and the International Monetary Fund hammered out an emergency package that was the largest in over two years since G20 leaders rolled out support for the world economy following the 2008 collapse of Lehman Brothers.

Following the announcement of the plan, the euro initially surged to near $1.31, rebounding from a 14-month trough of $1.2510 hit on trading platform EBS last week as investors had feared a sovereign credit crisis could spread from Greece to other euro zone countries.

Traders said the euro is likely to move in a $1.25-$1.31 range in the near-term.

The dollar was down 0.6 percent at 92.78 yen. (Editing by Edwina Gibbs)

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