Posted September 16, 2010
Japan holds back yen's rise. This causes US dollar to rally.
During the Wednesday currency trading session, the US dollar improved by three percent on the day. This occurred after the Japanese yen stopped improving because the Japanese authorities took action to stop the currency from rising.
The US dollar saw huge improvements during the Wednesday trading session, much of which was due to the pull back of the Japanese yen after officials worked to control its rise. The US dollar moves as high as Y 85.66, up from the low Y 82.85 it hit just the day before. That point was the lowest the US dollar has been at in the last 15 years. As of late Tuesday, the currency was at Y 83.13.
The ICE Dollar Index was also benefited from the increase in the US dollar's value against the yen. It moved the US dollar up from 81.064 on Tuesday to 81.429 for the day.
Investors believe that it is now up to the Japanese authorities to move aggressively to control the advancing yen. It is believed that the country's authorities intervened by some $2 billion to $17 billion worth of yen. The amount is not likely to be known until October. The intervention was done by selling off the yen and purchasing US dollars. As of Tuesday, the yen had risen 10.7 percent this year.
Other Asian central banks have also taken action recently to help control their weakening currencies. This is due to the US dollar to Yen ratio on each day. Many countries have had to intervene in the country's currency to keep pace with the yen's growth.
Euro and the UK Pound
Both the Euro and the UK pound fell during the currency trading session on Wednesday. The euro was under $ 1.30 for much of the trading day, and moved to US $1.3020 by the end of the trading day. It was at US $1.3024 at the end of trading on Tuesday. There seemed to be no immediate reaction on the euro after more data was released showing that no euro zone inflation pressures were reduced.
The UK pound moved from US $1.5531 as of Tuesday to US $1.5529 on Wednesday. Investors were listening as the Bank of England's governor confirmed again that he supports the government's plan to reduce its deficient. This is the country's method for improving the country's economy in the short and long term.