Dollar rallies versus euro on US tax plan report The dollar rose against the euro in Asia Tuesday on a report about a corporate tax holiday on the foreign profits of US firms being debated by Congress that would boost flows back to the US, dealers said.
Risk-sensitive currencies such as the euro also took a hit from a report by ratings agency Moody's that Chinese banks may be facing bigger problems with municipal loans, which is reducing risk appetite, said dealers.
The euro sagged to $1.4471 in Tokyo morning trading from $1.4524 in London late Monday. The European single currency was almost flat at 117.32 yen against 117.30 yen.
The dollar gained to 81.06 yen from 80.77 yen.
A Bloomberg report said a reduction in income tax on repatriated profits being debated by Congress could lead to as much as $700 billion in flows back to US, strengthening the dollar.
"The dollar was broadly bought against other major currencies in the wake of a the report," Tomohiro Ishikawa, dealer at Chuo Mitsui Trust and Banking, told AFP.
"The report raised speculation about future fund flows back to the United States," another dealer at a Japanese bank said.
The US market was closed Monday for the July 4 Independence Day holiday.
The single currency had earlier held firm despite a warning on Greece's debt from ratings agency Standard & Poor's that cast a shadow over recent progress in the debt crisis.
S&P said Monday that recent proposals for a new Greek bailout, under which private sector banks would rollover debt to give Greece more time to repay its debt, would be tantamount to a default.
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