Yen weaker on banks news

Story link: Yen weaker on banks news

The Japanese yen weakened early Monday as investors became more willing to make riskier deals on the possibility that the US government will put more money into Citigroup (NYSE: C) and after US Senate Banking Committee Chairman Christopher Dodd said Friday that some banks might have to relinquish control to the US government for “a short time”.

Others in both houses of the US Congress, however, have said this will not happen.

The yen was also hurt by a new report showing that Japan is carrying a trade deficit for the fourth consecutive month.

The euro, meanwhile, declined after comments from European Central Bank President Jean-Claude Trichet, who said in a speech that the flow of credit is beginning to dry up in the Eurozone.

In late morning trade in New York the yen traded at ¥94.54 to the US dollar and at ¥120.3565 to the euro while the US dollar was at $1.2731 to the shared currency.

The pound strengthened on signs that UK banks are working to improve their financial position after Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) was said to be planning on cutting costs by over £1 billion by creating two units and by cutting back on its investment banking activities.

At just before 11 a.m. in New York, the pound traded at 87.56p to the euro while it took $1.4539 to buy a pound and the yen traded at ¥137.4527 to the UK currency.