Yen strenghtens on delays in US bailout plan

Story link: Yen strenghtens on delays in US bailout plan

The yen was stronger in relation to several currencies Friday as investors backed away from risky currency trades on the inability of US legislators to reach an agreement on a bailout plan for the US financial sector and on the failure of US savings and loan Washington Mutual (NYSE: WM).

Washington Mutual was taken over by government regulators then sold to JPMorgan Chase (NYSE: JPM; TYO: 8634) for $1.9 billion after WaMu became the biggest bank to fail in United States history.

In late morning trade in New York, the yen had lost some of its gains versus the US dollar, trading at ¥106.1 to the greenback while it traded at ¥154.7945 to the euro, at ¥57.287 to the Brazilian real and at ¥87.9145 versus the Australian dollar.

Meanwhile, the dollar traded at $1.4589 to the euro.

The dollar was hurt not only by the WaMu failure and by the stall-out in negotiations over the bailout plan, but on increasing chances that the Federal Reserve will cut US interest rates in October and by new data from the Commerce Department that showed the US economy growing at a rate of only 2.8 percent in the second quarter rather than at the 3.3 percent rate that had been estimated earlier.

The pound was slightly stronger in relation to the greenback and the euro, with the pound trading at 79.28p to the euro at just about noon in New York, while it took $1.8405 to buy a pound.