by martinhn
18. October 2008 06:41
The Dollar rose against Yen on Thursday boosted by sharp gains in US stocks as risk aversion slowed after worldwide measures to help ease the global credit crisis. The yen tends to rise in times of increased risk aversion as investors unwound risky carry trades funded using the Japanese currency's low interest rates to buy assets in higher-yielding units.
Yesterday, UsdJpy rose 2.09% to 101.42. EurJpy also gained 2.49% to 136.79. EurUsd was up 0.39% at 1.3490. UsdChf ended only up 0.09% to 1.1345 after posting intraday 1.1491 high. GbpUsd rose 0.84% to 1.7338, partly boosted by Bank of England easier conditions for British financial firms to borrow from the central bank. Aud and Nzd also rose against Yen, respectively up 6.8% to 69.06 and 4.96% to 62.27. AudUsd and NzdUsd also rose respectively 4.6% to 0.6863 and 2.74% to 0.6140. Higher-yielding currencies such as the Australian and New Zealand Dollars gained with improving money market conditions helping support both units.
US stocks closed sharply higher in another volatile trading day. But Thursday's upward trend in stocks helped elevate the Dollar against the Yen. In the money market, most interbank loan rates fell amid more drastic steps by Central Banks to provide funds, improve bank balance sheets, and free up credit lines to cash-strapped firms. However, the cost of funding was still prohibitive. The Libor premium over anticipated policy rates rose as growing fears of recession affirmed expectations of interest rate cuts from central banks worldwide.
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