The U.S. dollar fell by almost 1% against the Japanese Yen as investors are wary about the impact of the $700 billion bailout plan aimed at dealing with the liquidity crisis in a comprehensive manner. The rescue plan is currently awaiting approval by the U.S. Congress. Once approved, it will give the U.S. Treasury the power to acquire all “toxic” mortgage-related debt currently on the books of financial institutions, including subsidiaries of foreign banks in the United States.
Law makers in Washington, D.C. are determined to get the plan approved as soon as possible because a delay is likely to send the markets reeling.
Although, the plan seemed to calm jitters in the market, investors are concerned about the impact of this huge bailout on the fiscal position of the U.S. because the Treasury will fund the bailout by borrowing more money, which will impact negatively on the U.S. Dollar in the near term.
At 11:20 GMT, the U.S. Dollar fell by 1.1% to 106.18 Yen, a decline from a two week high trade of 108.04, while the Euro rose by 0.9% against the U.S. Dollar at $1.4625. However, the Euro fell by 0.3% to 154.56 Yen against the Japanese Yen. The pound Sterling benefited from the selling of the U.S. Dollar and hit a three-week high of $1.8473.