With the United States’ mortgage problems trickling into Europe, many investors have been thrown into a panic. However, the Japanese have reduced their high-risk investments, moving funds back into the reliable yen. As a result, the yen is fairing much better than other currencies. Those who have suffered from this sudden scramble include New Zealand and Australia. According to Forbes:
The increasing pressures in credit markets — with the European Central
Bank yesterday injecting 95 bln eur to boost liquidity in euro money
markets — came on fears that the US subprime mortgage troubles may be
spreading to Europe. Several banks admitted exposure to subprime
markets, and BNP Paribas
froze three asset-backed funds. This caused investors to panic and cut
their exposure to carry trades — the use of low-yielding currencies to
fund higher-yielding investments.
Read more: Yen still strong on risk aversion
Original post by Amy Cottrell and software by Elliott Back
Tags: No Tags