The Japanese Yen fell to a one month low against the U.S. Dollar as a result of hawkish comments from U.S. officials, coupled with a sharp decline in crude oil prices. The Yen also fell to a record low versus the Euro as lower oil prices aided to boost risk appetite, pushing investors to move out of the low yielding Yen and into higher yielding assets.
On July 23, 2008 at 07:54 GMT, the U.S. Dollar traded at 107.83 Yen, while the Euro surged to a record high of 169.98 Yen, before dropping down to 169.76 Yen.
Yesterday, Charles Plosser, Philadelphia Federal Reserve Bank President said that if inflation continues to rise, the Federal Reserve will start hiking interest rates prior to the recovery of the financial and labor markets. In addition, on Tuesday, Henry Paulson, U.S. Treasury Secretary, also said that a strong U.S. Dollar is “really very important.” Both comments helped to give the U.S. currency a boost in the Forex markets.
Declining oil prices also helped fuel the recovery of the U.S. Dollar. Oil prices declined to $127 per barrel, compared to $147 per barrel a month ago.