Yen, sterling weaken as emerging currencies gain on US dollar

Story link: Yen, sterling weaken as emerging currencies gain on US dollar

Several emerging markets currencies strengthened in relation to the US dollar on Wednesday after new data on Tuesday made it seem more likely that US interest rates could be cut soon. This made investors more willing to take on risk and helped emerging markets.

The Brazilian real added 1.1 percent to trade at $$1.9610 versus the greenback at mid-afternoon in New York. The Israeli shekel, meanwhile, traded at Shk3.9265, a 8½ year high. The Philippine peso was at 46.94 pesos to the dollar, a six-year high, while the Turkish lira hit its highest level against the dollar this year at TL 1.3230.

The increased appetite for risk sent the Japanese yen lower as carry trades grew more popular. The yen was 0.3 percent lower to ¥163.90 versus the euro, a new record low, while it was at its lowest against the dollar in three months as it dropped 0.4 percent to ¥120.80.

Sterling was also weaker, falling in relation to the euro and the dollar after the Bank of England released its quarterly report on inflation, which confirmed suspicions that there will likely be another interest rate increase there soon. The pound dropped 0.1 percent to £0.6850 against the euro, while it was 0.2 percent lower to $1.9820 versus the greenback. The US dollar, meanwhile, added 0.1 percent to $1.3570 against the euro.