Yen weaker on US Fed move

Yen weaker on US Fed move

Story link: Yen weaker on US Fed move

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The yen weakened versus the euro and the US dollar Tuesday on more demand for carry trades after the US Federal Reserve said it will buy commercial paper - low-risk, low-return money-market securities issued by banks and corporations as an alternative to a line of credit to finance day-to-day expenditures such as payrolls.

The recent troubles in the financial sector has cut investor in commercial paper, forcing companies that issue it to turn to bank lines of credit.

The Fed did not say how much commercial paper it will buy or when it will begin the purchases, but the program will last until 30 April 2009 unless extended.

In addition, the Reserve Bank of Australia cut interest rates there by a full percentage point to 6 percent, with more cuts there expected, while the Bank of England is expected to cut rates when its Monetary Policy Committee meets on Thursday.

In early afternoon trade in New York, the yen traded at ¥138.8543 to the euro while it was at ¥102.0350 to the US dollar, at ¥178.5049 to the pound, at ¥65.43 to the New Zealand dollar and at ¥72.9448 to the Australian dollar.

The pound declined in relation to the euro on new data showing that UK manufacturing output declined 0.4 percent in August from July and after UK banks met with the government to discuss emergency funding.

The government could put as much as £45 billion ($79 billion) into the banks there.

At early afternoon in New York, the pound traded at 77.75p to the euro while it took $1.3608 to buy a pound.