The euro spiked against the dollar around 10:30 GMT on Thursday in reaction to comments by the Chinese Premier Wen Jiabao who said in a press conference that China is considering greater involvement in Europe’s rescue fund, known as the European Stability Mechanism (ESM).
Premier Wen met with German Chancellor Angela Merkel in Beijing today to discuss the European debt crisis. Wen said it’s important to resolve the euro debt crisis and Beijing will support Europe’s efforts in stabilising the euro.
The ESM will come into operation in July to replace the current bailout fund, the European Financial Stability Facility (EFSF). It will be a permanent fund with 500 billion euros available.
EURUSD jumped to 1.3190 from 1.3126 after Wen’s comments but the pair soon eased back to previous levels on quick profit taking.