The Japanese Yen rose against the U. S. Dollar and the Euro today as more data shows that the U.S. economy is slowing down considerably. This heightened investors’ fears that the current liquidity crisis had almost pushed the entire global economy into recession.
Although governments worldwide have initiated plans to deal with the liquidity problem by, among other things, pouring cash into financial institutions that are experiencing difficulties and helping to lower the cost of interbank lending, investors continue to be concerned about the impact of the credit crisis on the global economy.
Recently, it is becoming clear that the liquidity crisis has also affected economies in Asia and Eastern Europe and as a result, investors have moved out of risky trades financed with Japanese low-yielding yen.
The U. S. Dollar, which continues to benefit from risk aversion as the U.S. Dollar-based investors repatriate assets, gained on the Euro.
In early morning trading in New York, the U.S. Dollar fell by 0.6% against the Japanese Yen to 100.95 Yen, while the Euro also fell by 0.9% against the Japanese Yen to135.69 yen. The Euro also fell by 0.4% against the U. S. Dollar to $1.3435. The Pound Sterling remained flat at $1.7317.