Flight from risk helps yen, hurts pound

Flight from risk helps yen, hurts pound

Story link: Flight from risk helps yen, hurts pound

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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.