Yen Rallied after Bernanke, Bush Speeches

The yen rallied broadly after Fed Chairman Ben Bernanke and US President George W. bush gave separate speeches with regard to recent credit crunch.

On the central bank’s annual symposium in Wyoming, Bernanke said market turmoil can hit many outside the markets and the Fed policy must take into account. He reiterated that the central bank will act as needed to protect the economy, leaving the door open for an interest rate cut in September. The market is divided on whether the Fed may cut interest rates from 5.25% on its monetary policy meeting on September 18. The dollar gained versus the euro and yen after Bernanke said it’s not the Fed’s job to protect investors from their own financial decision.

Later, Bush gave a speech on how to help homeowners struggling to pay their mortgages. He said there have admittedly been excesses in mortgage supplies. He said new foreclosure avoidance initiative will help avoid repeat of current situation. Also,he is asking Congress for a temporary change in tax code to prevent people from being penalized when they refinance subprime mortgages. However, like Bernanke, he said government’s job is not to bail out speculators. He said the economy is strong enough to withstand any turbulence and recent subprime issues are modest in relationship to the size of the economy.