As reported at 2:59 pm (JST) in Tokyo today, investors’ appetite for risk forced the Japanese Yen to fall to its lowest level in almost 6 months versus both the U.S. Dollar and the single currency Euro. At one point, the U.S. Dollar rose .4% from Friday, its highest level since mid-October 2008, trading at 100.93 Yen on the EBS platform, then falling back slightly to 100.72 Yen. The Euro rose 1%, trading at 137.05 Yen, the highest price since October 2008, before falling back to 135.54 Yen.
According to one analyst, the reason for the sharp drop in the Japanese Yen has to do with market speculation. Last week’s hesitation by the ECB to (further) lower interest rates as expected is considered a predictor that more central banks will be hesitant to cut rates, and that in some economies the rate cutting cycle has nearly reached bottom.
Investors are optimistic that the global economies are improving, buoying Asian stocks. Emerging markets are showing some signs of recovery, according to some traders, propped up by the recent developments of last week’s G20 meeting, fueling risk appetite and demand for high yielding currencies including the New Zealand and Australian Dollars. Australia’s Reserve Bank will be holding its monthly policy meeting tomorrow, and whether or not it will cut interest rates is a matter of hot debate among analysts.