Yen strengthens on week

| October 20, 2006 | 0 Comments

The Japanese yen ended the week higher after the Russian central bank announced that it would buy more yen for its foreign-exchange reserves and on a report in a Japanese newspaper that the Bank of Japan will watch carry trades more closely. Even though the Bank denied that report, analysts felt that the report indicated that there are serious concerns over the issue of carry trades. The Russian remarks, meanwhile, were not only important because of the size of Russia’s foreign-exchange reserves but also because its move could indicate the beginning of a trend.

The yen added 0.1 percent during the week against the euro to ¥149.60, while it gained 0.9 percent versus the US dollar, to ¥118.70.

The greenback fell 0.8 percent in relation to the euro over the week to $1.2610, primarily on a series of new data releases that did not do much to clear up the picture concerning where the US economy is headed.

Meanwhile, sterling strengthened during the week as new data showed UK economic growth to be stronger than expected, raising the chances that the Bank of England will hike interest rates in November. The UK currency added 0.6 percent against the euro to £0.6700, while it gained 1.4 percent versus the US dollar to $1.8820.

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