Euro climbs above US$1.32 in thin trading

The European currency was up to US$1.3218 in Tuesday morning European trading from US$1.3144 in New York late Monday.

The euro has been weighed down for weeks by worries about Europe's debt crisis but has drifted higher over the holiday period.

The British pound was up to US$1.5443 from US$1.5404 and the dollar slipped to 82.43 Japanese yen from 82.84 yen.

Over the weekend, China raised its key interest rate for the second time in three months amid rising inflation. Fears of a slowdown in China weighed on stocks worldwide Monday but there was little reaction in currency trading.

In Asia Tuesday, the yen gained ground against the dollar on dollar selling by exporters, prompting Japan's finance minister to warn of possible intervention if the yen's recent rise continues, dealers said.

The dollar sagged to 82.44 yen in Tokyo afternoon trade from 82.78 in New York late Monday. Sales from Japanese exporters weighed on the U.S. currency, dealers said.

The euro rose to US$1.3235 from US$1.3161 and the European single currency was also up at 109.13 yen from 109.00 yen.

The dollar was generally lower against other Asian currencies. It fell to SG$1.2970 from SG$1.2979 on Monday and to NT$29.48 from NT$29.50. It also dipped to 9,028.25 Indonesian rupiah from 9,038.00 and to 43.90 Philippine pesos from 44.03, but edged up to 30.18 Thai baht from 30.17.

Intervention by Japan's financial authorities is unlikely at this stage, said Tomohiro Nishida, senior dealer at Chuo Mitsui Trust and Banking.

“It will be difficult to intervene in the market when the dollar is only trending down in thin trade, weighed by selling of Japanese exporters at month-end,” Nishida said.

The euro was up on short-covering after players failed to break below the euro's recent low of 108.33 yen marked on Nov. 30, said Kenichiro Ikezawa, a fund manager at Daiwa SB Investments.

Thin market conditions are expected to continue as investors are away for holidays, dealers said.

The market is focused on the US consumer confidence index due later in the day, as the dollar may rise against the yen in the near term if investors are happy that the world's biggest economy is showing solid recovery, dealers said.

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