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Yen Slides as Central Banks Act Jointly

September 18, 2008 at 11:06 by Andriy Moraru

Japanese YenThe Japanese yen fell today against the other major currencies on Forex after the central bank of the developed countries said that they will act together to provide the necessary liquidity to the global financial system.

The interbank borrowing cost of the U.S. dollar rose yesterday to the highest level since 1999. Federal Reserve European Central Bank and Bank of Japan joined in an effort to provide the financial markets with enough «cheap» funds to prevent further bankruptcies.

Such intervention by the world’s central banks decreases the global risks significantly. This weakens the yen’s positions as it’s considered a «safe haven» currency of our time. But in the long-term, yen’s bullish trend will return.

The Federal Reserve yesterday authorized other central banks to auction $180 billion in USD to the private financial companies. The European Central Bank will lend about $40 billion of the «short» money today and will start providing more liquidity on the long-term auctions.

USD/JPY rose from 104.36 to 104.68 as of 9:02 GMT today after reaching 105.57 daily high during the Asian trading session. EUR/JPY rose from 149.58 to 150.40 today. AUD/JPY increased from 82.45 to 83.79.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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