USD, yen down but pound gains on banks news

USD, yen down but pound gains on banks news

Story link: USD, yen down but pound gains on banks news

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The US dollar and the yen saw declines Wednesday on the chance that US government plans to help banks will improve economic conditions.

The plan calls for the Federal Deposit Insurance Corp to operate a co-called “bad bank� that would purchase bad assets from banks, removing them from the banks’ ledgers.

Such a move could reduce demand for the dollar as a safer investment.

Meanwhile, the pound saw gains as banks saw gains in equities markets and after Citigroup (NYSE: C) raised its recommendation on Lloyds Bank (LSE: LLOY) from “hold� to “buy�.

This follows the news earlier in the week that Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642) has said it will not need to raise more capital, instilling more confidence in investors that the economy could be seeing improvement.

The pound, however, gave back some of its gains after Prime Minister Gordon Brown said that the UK is entering a “deep recession�.

At nearly 11 a.m. in New York, the dollar traded at $1.3217 to the euro and at $1.4294 to the pound, while the pound was up to 92.47 to the euro and the yen traded at ¥118.5831 to the euro and at ¥89.72 to the greenback.