The Japanese Yen retreated from a 13-year highs versus the U.S. Dollar today as global stock markets bounced back and risk aversion ebbed, raising the possibility that official intervention is likely should the need arise.
Shares in the European market rose by 3.8% as investors slowed the pace at which they were unloading riskier positions. As a result, the Japan’s Nikkei surged by 6.4% from the lowest price in 26 years because investors have restricted their bets on falling stock prices.
In addition to equity gains, the Japanese Yen dropped broadly, particularly against such major currencies as the Australian Dollar and the Euro, in which recent investors have taken a beating because of investors’ suspicion that risk has reached extreme levels.
According to David Page, an economist at Investec, share gains have helped to remove some negative sentiment in the forex markets.
The Japanese Yen came under further pressure because Kyodo News Agency reported that the Central Bank of Japan is about to reduce Japan's economic growth estimated for the 2008/09 from the current 1.2% to 0.3%
On October 28, 2008 at 12:30 GMT, the U.S. Dollar rose by 2.7% against the Japanese Yen to 95.35, sliding back from 90.90 Yen, a 13-year low. The Euro also rose by 3.3% to 119.72 yen.