USD, yen gain on GM bankruptcy worries

USD, yen gain on GM bankruptcy worries

Story link: USD, yen gain on GM bankruptcy worries

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The US dollar and the Japanese yen saw gains Monday as investors looked for safe places to put their cash as equities markets declined and on the possibility that US automaker General Motors (NYSE: GM) could face bankruptcy.

In remarks during the day, US President Barack Obama said that neither GM nor Chrysler have yet proposed reorganization plans sufficient to justify further government help.

However, Mr. Obama said that his administration will give privately held carmaker Chrysler thirty days to pursue a merger with Italian automobile manufacturer Fiat (BIT: F) and will allow GM 60 days to come up with an adequate restructuring plan.

The Obama administration has already forced GM’s CEO from his position with the carmaker.

The yen was also helped by remarks from US Treasury Secretary Timothy Geithner which indicated that some US financial groups are - or will be - in need of more government help, but despite the yen’s gains a Goldman Sachs analyst has predicted that the Japanese currency will weaken in the near term, at least partly due to declines in exports.

In late morning trade in New York, the yen traded at ¥97.08 to the greenback and at ¥127.8546 to the shared currency, while the dollar was at $1.317 to the euro.

The Euro was hurt by expectations that the European Central Bank will cut interest rates to 1 percent later this week, the lowest the Eurozone rate has been since the currency was introduced in 1999.

Meanwhile, the pound weakened on the declines in equities markets and after the Confederation of British Industry said that the UK financial sector could cut as many as 15,000 jobs in the second quarter.

At shortly before noon in New York, the pound traded at 92.61p to the euro while it took $1.4221 to buy a pound.