Tokyo based massive sale of the Japanese yen spurred the daily drawdown of this Asian currency. Residents preferred to sell the yen opting for the riskier but higher yielding currencies, such as euro, Australian and New Zealand dollar and South african rand (so called carry trade investing).
The investors’ confidence for the global financial system’s stability was greatly inspired with the recent advances on the Japanese stock markets following the announcement by the U.S. government about the possible citizens’ tax breaks in order to give more support to the American economy.
The Japanese yen dropped 0.5% to 160.82 yens for 1 euro from 160.13 yesterday’s close rate showing the biggest drop since 27th of December 2007. USD/JPY posted even a bigger decline for the yen — almost 0.6% 108.89 to 109.49 slowing down the overall yearly growth of the Japanese currency versus the U.S. dollar.
While the U.S. dollar was mainly supported by the Wall Street Journal‘s report that the U.S. government is preparing a $500 tax rebate for the American citizens along with some investment incentives, euro is benefiting from the strong anticipation that the European Central Bank will hold the interest rate at the same 4% level after tomorrow monetary policy meeting.
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