Flight from risk helps yen, hurts pound

Story link: Flight from risk helps yen, hurts pound

Sterling weakened Monday on worries about the credit crisis had investors backing away from higher-yielding currencies and after a recommendation cut on Europe’s biggest bank when rated by market value.

HSBC (LSE: HSBA; NYSE: HBC; Euronext: HSBC; SEHK: 005) saw Morgan Stanley cut its recommendation on the bank from “overweight” to “equal weight” on the possibility that it will have more losses related to the US subprime mortgage crisis.

The pound was at ¥226.4070 versus the yen in afternoon trade in New York, around a three-month low, while it took $2.0612 to buy a pound after trading at $2.0588 to the pound earlier in the session, a three-and-a-half year low against the greenback.

Meanwhile, the yen benefited from the flight from risk and strengthened to a one-and-a-half year high versus the US dollar.

The yen traded at ¥109.8450 to the dollar in afternoon trade in New York, while it was at ¥159.7476 to the euro, ¥114.0240 to the Canadian dollar and at ¥97.1688 to the Australian dollar.

The US dollar traded at $1.4543 to the euro after hitting a record low against the shared currency on Friday, while sterling was at 70.56p to the euro.