Euro falls to two month low after Irish deal

TOKYO: The euro touched a fresh two-month low Monday in Asia, as the official rescue package for debt-ridden Ireland failed to ease the market's worries about the health of eurozone economies.

The euro fell to 1.3181 dollars before recovering to 1.3220 in late-morning trading in Tokyo, compared with 1.3247 in US markets Friday afternoon. The currency stood at 111.14 yen, also slipping from 111.30 in US trade.

The unit began the day on a stronger tone, reaching an intraday high of 1.3291 shortly after 7:00 am (2200 GMT) following the announcement on Sunday of Ireland's 85-billion-euro (113 billion dollars) bailout.

But it gradually lost steam as it slipped to its lowest level since late September on persistent fears that other nations, namely Spain and Portugal, may soon be lining up for help.

While the Irish package may "stabilize things a little bit, at the end of the day markets are still very, very interested in what's happening with Portugal and Spain as well," HiFX senior trader Stuart Ive told Dow Jones Newswires.

"Whilst Ireland and Irish banks may have settled down, there are still concerns surrounding those other two nations," he said.

The euro may fall to around 1.3100 in the near term, Osamu Takashima, chief FX strategist at Citibank Japan, told Dow Jones Newswires.

Dealers also worried over reports that creditors of eurozone countries that face insolvency after 2013 will in turn face a restructuring of their bonds and may be forced to take losses, Dow Jones said.

Meanwhile, the dollar stood at 84.07 Japanese yen, unchanged from Friday trading in the United States as uncertainty over the eurozone economy as well as military tension between North and South Korea boosted its safehaven status.

The dollar may firm to 85.00 later in global day as players prefer the safety of the greenback amid international risks, said Hideaki Inoue, senior dealer at Mitsubishi UFJ Trust and Banking.

The dollar is gaining strength in part due to repatriation demand from US firms towards the year end, he said.