The yen fell the most in three weeks against the euro as a flurry
of central bank interest-rate cuts helped revive investors demand for
higher-yielding assets funded in Japan.
Japan's currency also tumbled versus the U.S., Australian and New
Zealand dollars after equities in Asia and Europe rebounded. The
Brazilian real rose for the first time this month, one day after its
central bank drew on their foreign reserves to defend the currency.
``Some of the trades that had on during the chaos are subsiding,'' said
Matthew Kassel, director of proprietary trading at ING Financial
Markets LLC in New York. ``Some types of commitment to strong
coordinated actions should help improve sentiment. We need a few more
days like today to return to some sort of normalcy in the market.''
The advance of high-yielding currencies today is a ``dead cat bounce,''
said John Taylor, chairman of FX Concepts Inc., a New York firm that
manages $14.5 billion in currencies. ``We probably have one more
selling climax to come in the near term, and then we should have a
longer rally.''
Investors are reluctant to buy the yen before Group-of- Seven ministers
meeting tomorrow as the currency's gain may be ``starting to breach the
comfort zone'' of the officials, said Akio Shimizu, chief manager of
foreign-exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking
Corp., a unit of Japan's largest publicly traded bank.
G-7 finance ministers and central bankers will meet for two- days in
Washington to discuss the financial crisis, which has already led to
bank bailouts in most of the member nations.