The yen fell against higher-yielding currencies after
governments in the U.S., Europe and Australia pledged to support banks,
encouraging investors to increase holdings of euros, British pounds and
Australian dollars.
The yen headed for a record 7.1 percent decline against the
Australian dollar after Prime Minister Kevin Rudd allotted A$10.4
billion ($7.3 billion) in spending for home buyers, families and
pensioners. The U.S. Treasury will buy stakes in banks including
Citigroup Inc. and JPMorgan Chase & Co., people briefed on the plan
said. European countries committed $1.8 trillion to guarantee bank
loans and invest in lenders.
Shares rallied, with the MSCI Asia-Pacific Index of regional shares
rising 9.3 percent, heading for the biggest gain in a decade. The
Standard & Poor's 500 Index yesterday rose by the most in seven
decades.
The Bush administration will spend about half of a total of $250
billion for stakes in banks, people briefed on the matter said. The
banks are Citigroup, Wells Fargo & Co., JPMorgan, Bank of America
Corp., Goldman Sachs Group Inc., Morgan Stanley, State Street Corp.,
and Bank of New York Mellon Corp., they said. Treasury Secretary Henry
Paulson is scheduled to hold a press conference at 8:30 a.m. in
Washington.
Losses in the dollar accelerated against the euro after the Fed
said yesterday the European Central Bank, the Bank of England and the
Swiss National Bank will offer financial institutions unlimited funds
in the U.S. currency.
The London interbank offered rate, or Libor, for three- month dollar
loans dropped 7 basis points to 4.75 percent yesterday, the British
Bankers' Association said. Japan and Australia pumped $9.1 billion into
money markets after European leaders agreed to guarantee new debt from
financial institutions and use taxpayers' money to rescue banks.
Japan may halt sales of government-held shares to help protect
financial markets from the global credit crisis, Finance Minister
Shoichi Nakagawa said in a statement today. Japan will also take steps
to tighten restrictions on short-selling, while relaxing regulations on
share buybacks to limit the spread of the global financial crisis.
EUR/USD bargained in a range $1,3600-$ 1,3695.
GBP/USD having shown session high on $1,7560, the rate has receded in area $1,7410.
USD/JPY having established session high on Y103,10, the pair has
receded in area Y102,00. Later the rate has continued to be
consolidated in range Y102.00-Y102.50.
Germany ZEW economic expectations index (October) is due at 0900GMT, expected to come in at -52.0.
E15 ndustrial production (August) is due at 0900GMT. Expected to come in at 1.1% m/m, -1.7% y/y.
At 1800GMT, the US Treasury is expected to post a $45.0 billion surplus
in the September tax month, leaving the full fiscal year gap much wider
than the 2007 fiscal year due to a decline in receipts and rising
outlays.