Yen under pressure as stocks rebound
Friday, 24 August 2007
TOKYO, Aug 23 (AFP): The yen lost ground in Asian trade today as rebounding global stock markets dented the currency's recovery and the Bank of Japan left its key interest rate unchanged as expected, dealers said.
They said that easing fears of a credit crunch had reduced the risk aversion that drove the yen up sharply last week.
The dollar firmed to 115.78 yen in Tokyo afternoon trade from 115.31 in New York late Wednesday.
The euro was stable at 1.3548 dollars after 1.3541 and at 156.73 yen from 156.17.
"There is a feeling of reassurance in the market with share prices regaining stability. I think we've escaped the worst period," said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank in Tokyo.
Fears of a credit squeeze prompted investors to flee to safe havens such as US Treasury bills and to reduce risk appetite, pulling out of risky positions such as so-called "carry trades."
Carry trades are when investors borrow low-yielding currencies such as the yen to buy high-return currencies and assets including the Australian and New Zealand dollars, or the British pound.
Those high-yielding currencies rose against the yen early Thursday as investors started to regain some of their appetite for risk.
Futures markets have priced in a rate cut at the Fed's next meeting on September 18, dealers said.
They said that easing fears of a credit crunch had reduced the risk aversion that drove the yen up sharply last week.
The dollar firmed to 115.78 yen in Tokyo afternoon trade from 115.31 in New York late Wednesday.
The euro was stable at 1.3548 dollars after 1.3541 and at 156.73 yen from 156.17.
"There is a feeling of reassurance in the market with share prices regaining stability. I think we've escaped the worst period," said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank in Tokyo.
Fears of a credit squeeze prompted investors to flee to safe havens such as US Treasury bills and to reduce risk appetite, pulling out of risky positions such as so-called "carry trades."
Carry trades are when investors borrow low-yielding currencies such as the yen to buy high-return currencies and assets including the Australian and New Zealand dollars, or the British pound.
Those high-yielding currencies rose against the yen early Thursday as investors started to regain some of their appetite for risk.
Futures markets have priced in a rate cut at the Fed's next meeting on September 18, dealers said.