Japanese Yen gains as Investors Seek Safe-havens
The Japanese Yen gained slightly today because of the stalled negotiations regarding the $700 billion bailout package for the United States financial sector. In addition, the demise of Washington Mutual triggered investors to stay aware from risky trades.
Investors moves out of high-yielding currencies and stocks and sought refuge in government bonds. Money Markets experienced some pressure, as the 3-month U.S. Dollar Inter-bank rates remained very high at the London fixing.
Late Thursday, the bailout talks broke down and this prompted the U.S. authorities to close down Washington Mutual, the largest loans and saving institution in the country and the largest bank failure in U.S. history. This prompted massive ructions in the financial market. As investors’ aversion to risk increased, the Japanese Yen became the currency of choice. As a result, the Japanese Yen gained 1.1% against the Greenback and traded at 105.22 Yen. The Euro dropped 1.10% to 15.04 Yen. The Euro changed slightly against the Dollar and traded at $1.4619.
Recent data released shows that the United States economy did not grow as expected in the second quarter. The U.S. Dollar Index of the ICE Futures Exchange, which measures the value of the U.S. Dollar against six major currencies dropped by 0.2% to 76.866.