The yen fell broadly as global financial market calmed down and investors resumed risk appetite. As carry trade positions are rebuild, the yen weakened against high-yielding currencies. The dollar climbed from 114 to test 115.50 versus the yen. The sterling rallied sharply to near 230 against the yen, while the euro approached the 156 level.
The Bank of Japan is widely expected to hold its interest rates unchanged at current low level of 0.5% on its policy meeting this week. This will raise investors’ interests in carry trades.
The European Central Bank planned to inject 40 billion euros to the banking system to facilitate liquidity needs, easing worries over credit market.
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