Japanese Yen down on renewed optimism

11-04-2009 14:12

The Japanese Yen declined versus the Kiwi Dollar and South African Rand on the back of new optimism regarding the recovery of the international economy, increasing risk appetite. Japan’s currency pointed to another day of losses versus the New Zealand Dollar. Economists stated in an US report that factory orders rose in September, boosting demand for more profitable currencies.

Withdrawal of stimuli

The Greenback dropped as the Fed is expected to leave the interest rates close to zero, considering the fact that they will not announce a withdrawal of stimuli. The Aussie, an informal term for the Australian Dollar, rebounded as the Reserve Bank of Australia increased borrowing costs by 0.25 percentage point, in accordance with analysts’ expectations.

Japanese Yen down

Norifumi Yoshida, vice president of the trading section in Singapore at Mizuho Corporate Bank Ltd., commented: “We see renewed risk-seeking as a result of recovering economies. For that reason, the Japanese Yen is losing its attractiveness.”

Unchanged rates

The Greenback fell ahead of the central bank’s announcement of tomorrow regarding its monetary policy at the end of its policy meeting. The Federal Reserve stated in the preceding meeting that it will leave the rates close to zero for an “extensive period.”

Fragile

Jon Greenlee, Fed Associate Director, said that the American banking system remains “fragile and lacks stability”, as it has been affected by a devaluation of commercial real-estate and threatened by increasing expectations for failures to fulfill obligations of such loans.

Extensive period

Takashi Yamamoto, chief trader at Mitsubishi UFJ Trust & Banking Corp in Singapore, stated: “It is not expected that the Federal Reserve will withdrawal its statement regarding the ‘extensive period’, considering the unstable situation of the economic recovery. The Greenback is a favored funding currency worldwide and for that reason it is expected that the downward trend will continue.”