Yen weaker on Fed offer, Buffett deal with Goldman Sachs

Story link: Yen weaker on Fed offer, Buffett deal with Goldman Sachs

The Japanese yen was weaker Wednesday versus the euro and the dollar after investor interest in risky currency trades returned on a move by the US Federal Reserve to make more cash available to some central banks in order to stimulate lending and after Berkshire Hathaway (NYSE: BRK.A, BRK.B), Warren Buffett’s holding company, said it will buy $5 billion worth of Goldman Sachs (NYSE: GS) and will also get rights to buy that much more in the company in the next five years as part of the deal.

Meanwhile, the US dollar declined versus the euro on the Fed offer of $30 billion to central banks in Norway, Sweden, Denmark and Australia, as well as on the increased chance that the Fed will cut US interest rates next month and on resistance in Congress to the Bush administration’s plan to buy up bad debts from banks.

The dollar was also hurt by a report from the National Association of Realtors that showed sales of existing homes in the US down 2.2 percent in August while the median price for an existing home dropped 9.5 percent to $203,100.

In late morning trade in New York, the yen traded at ¥155.5411 to the euro and at ¥106.005 to the greenback while it was at ¥88.8110 to the Australian dollar and at ¥72.669 to the New Zealand currency.

The Brazilian real gained on the greenback after the Berkshire Hathaway deal with Goldman Sachs revived interest in carry trades, trading at R$1.8290 to the dollar.

The South African rand also saw gains after Finance Minister Trevor Manuel, who resigned yesterday along with other members of the government after President Thabo Mbeki was forced to quit over the weekend, said he was willing to return to his post in a new government.

Mr. Manuel has been South Africa’s finance minister for 12 years.

At late morning in New York, the rand traded at R8.1395 to the US dollar while it was at R11.946 to the euro and at R15.079 to the British pound.