Yen Advances on Stocks Downfall

The Japanese yen rose against all other major currencies today on Forex as the stock markets declined in Asia and Europe, while the investors became concerned about more losses from the mortgage crisis worldwide.
The yen also advanced significantly against its carry trade counterparts — such as Australian and New Zealand dollars. In carry trade investors borrow cheap Japanese yen to buy high yielding assets, such as Australian and New Zealand currencies, bonds. With the growth of currency volatility such positions become less attractive and the yen usually grows.
Asian stocks tumbled today after the report from Lehman Brothers Holdings Inc. that showed that largest U.S. mortgage providers will have to borrow as much as $75 billion to cover the losses.
The Group of Eight nations also signaled in the favor of the stronger yuan, which will probably pull up other Asian currencies, including the Japanese yen. Intraday Forex traders use such information and increased their yen long positions.
USD/JPY declined from 107.14 to 106.44 as of 8:44 GMT today, yesterday the currency pair grew insignificantly. EUR/JPY dropped below the last Wednesday’s open level and is now trading at 167.40 after opening at 168.48 today. GBP/JPY fell from 211.66 to 210.48.

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