JPY Reacts Positively to Citigroup Bailout Plan
Posted on 25. Nov, 2008 by admin in JPY Economic News, Japanese Yen, Japanese Yen Currency
The Japanese currency added to recent gains as investors continued to sell-off risky assets in response to the U.S. government bailout plan for Citigroup did little to convince the market that the end of the financial crisis is near. In the short-term the JPY continued to increase against the USD as Japan’s Equities and Commodities markets acted positively to the Citigroup bailout plan.
The Yen trimmed two days of losses against the Dollar and the EUR as investors took advantage of riskier currencies, reducing demand for carry trades. The JPY rose 0.6% yesterday to 96.88 Yen against the USD, as investors continued to flock to the low-yielding Japanese currency after discarding positions in higher-yielding currencies in an ongoing reversal of the carry trade. The JPY also strengthened to 124.94 per EUR from 126.08 yesterday. Analysts say that this is in response to the weak reading of the German business climate, which underlined weaknesses in the German economy. This in turn kept expectations high for cuts in Euro-Zone Interest Rates. Analysts believe that worries among investors about a deep and prolonged global recession will likely continue to support the Yen over the coming months.
