Yen weaker on return to carry trades

Yen weaker on return to carry trades

Story link: Yen weaker on return to carry trades

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The yen weakened Tuesday as investors returned to purchases of higher-yield currencies after global governments elaborated on plans to support banks, while the US dollar was lower versus the euro, the pound and other currencies as demand declined for the greenback.

In early afternoon trade in New York, the yen was at ¥139.675 to the euro and at ¥102.195 to the US dollar while it traded at ¥72.0219 to the Australian dollar and at ¥63.823 to the New Zealand dollar.

In addition to gains versus the yen, the Aussie and kiwi both saw gains versus the US dollar, with the Australian currency helped by an announcement by Prime Minister Kevin Rudd of a stimulus plan to help out families, the elderly and first time home buyers.

The stimulus plan announcement came after Mr. Rudd said over the weekend that his government will guarantee all deposits in Australian financial institutions for three years.

The Australian dollar traded at 70.47 cents US in early afternoon trade in New York while at the same time the kiwi traded at 62.45 cents US.

News of the UK bank bailout helped the pound, while the Office for National Statistics announced that inflation has now exceeded the Bank of England’s 2 percent target for a full year as prices rose 5.2 percent on an annualized basis in September.

It cost $1.7478 to buy a pound, while at the same time, a euro was worth $1.3667.

The dollar was also weaker versus a Brazilian real that was helped out by the US plan to put $250 billion into the US banking system and by a sale by the Brazilian central bank of US dollars on the spot market.

At just past noon in New York, the real traded at R$2.126 to the US dollar.

The South African rand gained on the greenback as well, trading at R9.0125 to the dollar after equities markets rallied, encouraging investors to buy high-yield currencies such as the rand.