The Japanese Yen weakens as investors buy assets over seas

The yen fell against the dollar and declined versus the euro on speculation Japanese investors will buy more overseas assets on signs the global recession is easing. The yen weakened versus all 16 of the most-traded currencies after Japan’s Ministry of Finance said the nation’s investors boosted purchases of foreign bonds to the most in a month. The yen also fell the most in a week against the euro as the Nikkei 225 Stock Average reversed earlier losses to gain 0.1 percent, boosting demand for riskier assets. “Equity markets of emerging economies, including Asia, are holding a relatively firm undertone, which means risk appetite is still reasonably strong,” said Akira Takeuchi, a Tokyo-based currency dealer at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group. “The yen will be sold against higher-yielding currencies.” The USD/JPY is currently trading at 96.85 as of 10:47am, London Time.

Sterling retained a broadly bullish tone on Wednesday as the pound breached the key $1.60 level against the dollar, a near seven-month high.
Receding pessimism about the UK economy and financial sector buoyed the pound, as well as rising equities and higher oil prices, prompting investors to shed the dollar and yen for perceived riskier assets. "The market is taking a more optimistic view of the UK economy and although I think it is too early to say the economy has bottomed out, it is hard to ignore the change in sterling sentiment," said Paul Robson, senior currency strategist at RBS Global Banking. Data from the British Bankers' Association showed the number of mortgages approved for house purchase rose very slightly on the month in April but were still down 15.5 percent on a year earlier. The GBP/USD is currently trading at $1.5930 as of 10:51am, London Time.

Treasury Secretary Timothy Geithner said he sees indications that the U.S. economy is in the early stages of rebounding from a recession. “The national economy is showing some initial signs of stability, confidence is improved, the financial system is starting to heal, credit is starting to ease a bit,” he said in Roxbury, Massachusetts. “It’s just the beginning, however. We have a lot more work to do to lay the foundation for a sustainable recovery with the gains broadly shared among all Americans.” The U.S. government’s Aaa credit rating is stable “even with a significant deterioration” in the nation’s debt, Moody’s Investors Service said today, signaling confidence in a rebound from the recession.