By: Barbara Zigah
Market fears about the potential default of mounting debt in the United Arab Emirates has been assuaged, following the central bank’s move to provide emergency assistance to Dubai’s financial institutions. As a result, the Japanese Yen and the U.S. Dollar slipped in Asian trading today, as speculators reduced their holdings. As reported at 1:45 p.m. (JST) in Tokyo, the U.S. Dollar Index, a measure of the U.S. currency’s value versus a basket of other currencies, slipped to 74.590 .DXY, a .5% decline from last Friday’s trade in the United States when it had gained nearly 1%. The Japanese Yen fell .7% versus the Euro, trading at 130.46 Yen.
Market fears about the potential default of mounting debt in the United Arab Emirates has been assuaged, following the central bank’s move to provide emergency assistance to Dubai’s financial institutions. As a result, the Japanese Yen and the U.S. Dollar slipped in Asian trading today, as speculators reduced their holdings. As reported at 1:45 p.m. (JST) in Tokyo, the U.S. Dollar Index, a measure of the U.S. currency’s value versus a basket of other currencies, slipped to 74.590 .DXY, a .5% decline from last Friday’s trade in the United States when it had gained nearly 1%. The Japanese Yen fell .7% versus the Euro, trading at 130.46 Yen.
Both the U.S. Dollar and the Japanese Yen had seen sharp gains last week when the Dubai debt crisis was first revealed, with investors retreating to the safe-haven positions of the low-yielding currencies. Yesterday, the central bank of the UAE established an emergency loan facility intended to encourage bank lending, though analysts suggest that this action will have only limited impact on the markets, as it is seen as merely a stop-gap action. They suggest that additional policy interventions will need to be put into place in order to prevent the derailment of the global recovery.