The U.S. Dollar gained against the Japanese yen on Monday because stocks in the U.S. recouped some losses even though renewed concerns that some financial institutions will be compelled to write down additional mortgage related assets. However, the U.S. Dollar eased versus the Euro as concerns over the decline in crude oil prices waned and the unexpected decline in the Euro-zone investor morale. The Japanese Yen closed at 107.18, down .3% in late New York trading, and the Euro closed at $1.5720, up .1% in late New York trading.
According to Steven Malyon on Scotia Capital in Toronto, investor concerns over American financial institutions are “taking some of the air out of the U.S. Dollar.” Officials at Lehman Brothers caution that accounting changes in Freddie Mac and Fannie Mae (both are the largest source of funding for home mortgages in the United States), could compel these institutions to raise capital from the market very soon. Consequently, shares of Freddie Mac and Fannie Mae dropped, dragging down financial shares and the stock market.
Investors have focused their attention on the summit of the G8 in Japan and it is strongly believed that solving the high crude oil prices, high food prices and global inflation will require a concerted effort by both developed and developing countries.