Yen down on US dollar

The yen fell to a seventh-month low on the dollar in Asia, while the euro held firm as investors continued unwinding negative bets on the single currency before a fresh liquidity injection by the ECB, reports Reuters.

The yen, which has been pressurised since the Bank of Japan’s surprise easing earlier in February, fell to depths not suffered since July. The dollar hit a high of 81.48 yen, equalling the 8 July peak, and rising from 81.00 in late New York trading on Friday. The euro moved up to 109.81, its highest point since 31 October.

Against the dollar, the euro stood at $1.3472, close to the two-and-a-half month high of $1.3486 which was set last Friday. The European Central Bank is set to offer European banks an unlimited amount of cheap three-year loans for a second time. A poll of economists has revealed that banks will borrow 492bn euros, almost as much as was taken the 489bn taken on in the first deal before Christmas.

AMP Capital Investors’ head of investment strategy Shane Oliver said that interpreting the outcome is tough because a high figure could be viewed is good as it means banks could be raising cheap money in order to lend, or bad because they are reliant on the ECB to fund them.