Yen, swiss franc weaken on carry trades

Story link: Yen, swiss franc weaken on carry trades

After two days of gains against the US dollar, the yen weakened on Tuesday after investors returned to risk in t he form of carry trades, encouraged by a deal in which Abu Dhabi said it would purchase a stake in Citigroup (NYSE: C) that will put $7.5 billion in cash into the bank to help balance out losses from the subprime mortgage mess.

In early afternoon trade in New York, the yen traded at ¥108.6100 in relation to the US dollar, while it was at ¥160.9545 to the euro, at ¥224.3415 to the pound and at ¥95.0989 to the Australian dollar.

The Swiss franc also weakened as investors became willing to take on more risk again.

It took SFr1.1062 to buy one US dollar while the Swiss currency was at 1.6393 to the euro, at SFr2.22848 to the pound and at SFr0.9685 to the Australian dollar.

The US dollar stood at $1.4819 to the euro, gaining on the shared currency as many traders felt that the euro has become overvalued.

Meanwhile, the European Union announced that Cyprus and Malta will become the fourteenth and fifteenth nations to join the euro on 1 January after an assessment showed that all preparations had been completed ahead of the changeover.

In Cyprus the euro will replace the Cypriot pound, while in Malta it will take the place of the Maltese lira.