Yen Falls as Investors Seek Higher Returns

The yen fell 0.7 percent to 83.07 to the dollar at 8:30 am in New York this morning from yesterday’s close of 82.48. Recent comments from the European Central Bank have raised expectations of an interest rate hike at the next ECB scheduled for early April and this has investors selling yen to purchase Euro-based assets.

There is a growing belief that the yen will be used as the funding currency for a resurgence of the carry trade. This could be beneficial to Japan and may help prevent an appreciation of the yen thereby supporting Japan’s export industry struggling to recover from the damage caused by this month’s tsunami.

Source: FT.com

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