Yen drops as markets calm

Yen drops as markets calm

Story link: Yen drops as markets calm

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The Japanese yen saw significant declines over the week as world markets seemed to calm down, emboldening investors to begin to again to sell the yen and enter carry trades.

The US dollar added 1.6 percent to ¥116.09, the euro gained 2.7 percent to ¥158.33, and sterling was 2.9 percent higher to ¥233.32, while the New Zealand dollar climbed 4.5 percent to ¥83.06 and the Australian dollar was up 4.6 percent to ¥95.47.

The US dollar dropped in relation to both the euro and sterling after the US Federal Reserve cut the discount rate at which it lends money to banks to 5.75 percent from 6.25 percent and as some began to believe it could cut the benchmark rate soon.

The euro added 1.2 percent this week in relation to the greenback, to $1.3637, while sterling added 1.4 percent to $2.009 on the assumption that current market moves will not influence the Bank of England to abandon its policy position and on the belief that the UK interest rate could rise again soon.

With this support for sterling, the euro dropped 0.2 percent versus sterling, to £0.6786.