Yen soars as speculators shun risk
Tuesday, 7 October 2008
TOKYO, Oct 6 (AFP): The yen struck a near five-month high against the dollar and surged against a range of currencies as investors rushed to exit risky positions amid fresh turmoil on global markets.
The euro hit a 13-month low against the dollar as the crisis in Europe's banking sector deepened, requiring a rescue of Germany's fourth biggest bank.
At one point the dollar touched 102.85 yen, its weakest since May 22.
In late Tokyo trade the dollar was at 103.12 yen, down sharply from 105.27 late Friday in New York. The euro tumbled to 140.58 yen from 145.16.
"Players see the yen as a less risky currency as the market is full of suspicion," said Yosuke Hosokawa, head of Chuo Mitsui Trust Bank's forex group.
"No one seems ready to take risks under the current circumstances."
The yen tends to do well in times of financial turbulence as speculators unwind risky trades funded with cheap Japanese credit. Japan has also escaped financial turmoil on the same scale as in the United States and Europe.
The Japanese currency also rose sharply against high-yielding currencies such as the Australian and New Zealand dollars. The British pound plunged more than five yen to hit 180.74 yen.
The euro took a beating after Germany's number four bank, Hypo Real Estate, had to be rescued Sunday as problems in the European financial sector deepened.
The euro briefly fell below 1.3600 dollars in Tokyo afternoon trade for the first time since September 2007, down from 1.3781 in New York late Friday.
After the US Congress finally passed a Wall Street bailout bill, traders were turning their attention to the problems among European banks.
Markets were looking ahead to a meeting Friday of finance chiefs from the Group of Seven rich nations amid speculation they could announce coordinated action to try to contain the growing financial mayhem.
Against regional Asian currencies, the dollar rose to 1,272.50 South Korean won from 1,226.10 on Friday, to 34.37 Thai baht from 34.19, and to 1.4616 Singapore dollars from 1.4472.
It gained to 32.32 Taiwan dollars from 32.17, to 47.39 Philippine pesos from 47.17 and to 9,570 Indonesian rupiah from 9,478.
The euro hit a 13-month low against the dollar as the crisis in Europe's banking sector deepened, requiring a rescue of Germany's fourth biggest bank.
At one point the dollar touched 102.85 yen, its weakest since May 22.
In late Tokyo trade the dollar was at 103.12 yen, down sharply from 105.27 late Friday in New York. The euro tumbled to 140.58 yen from 145.16.
"Players see the yen as a less risky currency as the market is full of suspicion," said Yosuke Hosokawa, head of Chuo Mitsui Trust Bank's forex group.
"No one seems ready to take risks under the current circumstances."
The yen tends to do well in times of financial turbulence as speculators unwind risky trades funded with cheap Japanese credit. Japan has also escaped financial turmoil on the same scale as in the United States and Europe.
The Japanese currency also rose sharply against high-yielding currencies such as the Australian and New Zealand dollars. The British pound plunged more than five yen to hit 180.74 yen.
The euro took a beating after Germany's number four bank, Hypo Real Estate, had to be rescued Sunday as problems in the European financial sector deepened.
The euro briefly fell below 1.3600 dollars in Tokyo afternoon trade for the first time since September 2007, down from 1.3781 in New York late Friday.
After the US Congress finally passed a Wall Street bailout bill, traders were turning their attention to the problems among European banks.
Markets were looking ahead to a meeting Friday of finance chiefs from the Group of Seven rich nations amid speculation they could announce coordinated action to try to contain the growing financial mayhem.
Against regional Asian currencies, the dollar rose to 1,272.50 South Korean won from 1,226.10 on Friday, to 34.37 Thai baht from 34.19, and to 1.4616 Singapore dollars from 1.4472.
It gained to 32.32 Taiwan dollars from 32.17, to 47.39 Philippine pesos from 47.17 and to 9,570 Indonesian rupiah from 9,478.