The yen pared its earlier gains against high-yielding currencies as risks aversions calmed down when US stock market rallied today.
US stocks rebounded sharply on Wednesday with the S&P 500 and Nasdaq up more than 2%. As a result, the yen slid broadly as investors resume carry trades. Also, the dollar lost its lust as a safe-haven when risk aversion declined. The dollar rose from below 114 to test the 116 handle versus the yen, while the sterling rallied sharply from low 227 to as high as 234.10.
Besides, carry trades in which the yen is borrowed as a funding currency are not likely to disappear as the Bank of Japan is widely expected to keep its interest rates unchanged at current low level in the medium term.
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