Yen, US dollar decline on central bank actions

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After early gains on Friday, both the yen and the US dollar declined late in the day in New York trade after the central banks of Japan, Europe, Canada, Australia, and the US added around $135.7 billion between them to global money markets in an effort to avoid a crisis brought on by problems in credit markets.

The yen was down 0.3 percent to ¥118.55 versus the US dollar, while it had dropped 0.5 percent to ¥162.38 in relation to the euro.

Meanwhile, the greenback was 0.2 percent lower against the euro, to $1.3699.

During the day the European Central Bank put €61.05 billion ($83.6 billion) into the banking system after an injection of €94.8 billion on Thursday.

The Bank of Japan put in ¥1 trillion ($8.5 billion), while the US Federal Reserve put in $24 billion Thursday and $35 billion Friday in four separate transactions over the two days and Canada’s central bank added C$1.64 billion ($1.55 billion) into the system.

There was some talk that the US Federal Reserve might issue an emergency interest rate cut to deal with the crisis, but other analysts believe they will wait until the next scheduled meeting in September to cut rates and some argued that a rate cut would only make matters worse by further weakening the US dollar.