The euro hit the day’s high against the dollar and rallied across the board after a document on the guidelines for the euro zone bailout fund was released and provided investors with some clarity on how European officials plan to tackle the debt crisis.
The euro rose as high as $1.3836 by 0930GMT, moving off an earlier session low of 1.3672. Details of the guidelines prompted investors to purchase the single currency.
Against the yen , the euro rose as high as 106.18 from a 104.87 low.
The Guidelines document highlights the following:
-After buying bonds on the secondary markets EFSF can sell them back on the market, hold them to maturity, then sell them back to the issuing sovereign or use the bonds for repos with commercial banks
-The amount of money available for secondary market intervention by the EFSF would be equal to the remaining lending capacity of the bailout fund
-EC, ECB would prepare agreement with eurozone countries in 1-2 days specifying how long secondary market purchases would take place
-EFSF to be able to buy bonds on the secondary market as long as the euro zone country has no bank solvency problems and has a track record of reasonable borrowing costs.