Yen firm in Asian trade as investors avoid risks
Wednesday, 15 August 2007
TOKYO, Aug 14 (AFP): The yen gained ground against other major currencies in Asian trade today, lifted by growing risk aversion following recent turmoil on global markets, dealers said.
They said that the yen continued to benefit from an unwinding of risky 'carry trades'-when speculators borrow in countries with low interest rates, such as Japan, to buy high- yielding currencies.
The dollar fell to 117.92 yen in Tokyo afternoon trade from 118.23 in New York late Monday.
The euro was flat at 1.3609 dollars, while falling to 160.46 yen from 160.86, approaching last week's near four-month low just below 160 yen.
Recent concern that money markets around the globe may be facing a liquidity shortage has prompted investors to reduce exposure to risky trades.
Concerted action by world central banks to supply liquidity has brought a brief sense of relief to players although they remain on edge for further possible bad news on the US mortgage sector, dealers said.
The US, eurozone and Japanese central banks Monday pumped billions more dollars into money markets, although the Federal reserve limited its injection Monday to a modest two billion dollars.
The central bank's injections into the financial system have dampened expectations of further near-term rate hikes, dealers said.
The ECB's moves have led to speculation that the central bank will not raise rates in September as previously widely expected, Kyriakopoulos noted.
The Bank of Japan meanwhile Tuesday moved to withdraw all of the 1.6 trillion yen (13.5 billion dollars) it had injected into the banking system over the past two working days, reflecting easing fears of a credit crunch.
They said that the yen continued to benefit from an unwinding of risky 'carry trades'-when speculators borrow in countries with low interest rates, such as Japan, to buy high- yielding currencies.
The dollar fell to 117.92 yen in Tokyo afternoon trade from 118.23 in New York late Monday.
The euro was flat at 1.3609 dollars, while falling to 160.46 yen from 160.86, approaching last week's near four-month low just below 160 yen.
Recent concern that money markets around the globe may be facing a liquidity shortage has prompted investors to reduce exposure to risky trades.
Concerted action by world central banks to supply liquidity has brought a brief sense of relief to players although they remain on edge for further possible bad news on the US mortgage sector, dealers said.
The US, eurozone and Japanese central banks Monday pumped billions more dollars into money markets, although the Federal reserve limited its injection Monday to a modest two billion dollars.
The central bank's injections into the financial system have dampened expectations of further near-term rate hikes, dealers said.
The ECB's moves have led to speculation that the central bank will not raise rates in September as previously widely expected, Kyriakopoulos noted.
The Bank of Japan meanwhile Tuesday moved to withdraw all of the 1.6 trillion yen (13.5 billion dollars) it had injected into the banking system over the past two working days, reflecting easing fears of a credit crunch.