Wednesday April 22, 2009 - 20:27:08 GMT
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Reuters - www.reuters.com
FOREX NEWS - Yen gains on export data, dollar dips vs euro
* Yen gains as unease lingers but export data offers hope
* Euro gains on dollar as stocks shake off earlier losses
* Sterling tumbles as UK forecasts surge in borrowing
(Updates prices, adds details)
By Steven C. Johnson
NEW YORK, April 22 (Reuters) - The dollar fell against the
yen on Wednesday, partly due to signs of a modest recovery in
Japanese exports, while the British pound plunged after the
government forecast a surge in borrowing this year.
The euro also gained on the dollar, but retreated from a
session peak above $1.30 as Wall Street stocks fell in late
trade, boosting some safe-haven flows into the greenback.
Nagging worries about the financial system kept investors
from taking on too much risk, however, undermining
higher-yielding currencies such as the New Zealand dollar and
boosting the yen, which typically firms when anxiety rises.
The International Monetary Fund said the world economy was
in a deep recession and slashed its global growth forecast,
while Morgan Stanley reported a second straight quarterly loss.
For more, see [ID:nN21500818]
"Investors are trying to decide which way to jump," said
Wells Fargo currency strategist Nick Bennenbroek. "The question
is whether to bet on a more sustained recovery in financial
markets or position for a renewed risk aversion."
The dollar fell 0.7 percent to 97.97 yen <JPY=>, while the
euro fell 0.3 percent to 127.38 yen <EURJPY=>. The euro rose
0.5 percent to $1.2998 <EUR=>, off a session high of $1.3036.
The yen also rose against the Australian <AUDJPY=R> and New
Zealand dollars <NZDJPY=R>.
The uncertainty in the market over the health of the world
banking system accounted for some yen gains, but investors said
data showing Japanese exports rose in March also helped, even
though they were at nearly half the level of the year earlier.
"That was good justification for some yen strength. Traders
took it as a good reason to buy yen today," said Sebastien
Galy, currency strategist at BNP Paribas in New York.
Sterling fell 1.2 percent to $1.4480 <GBP=> after British
Finance Minister Alistair Darling said the UK's budget deficit
will soar to 175 billion pounds this year, some 12 percent of
GDP, and top earners will face a new 50 percent tax rate.
The euro rose 1.8 percent to 89.75 pence <EURGBP=>.
"A debt-to-GDP ratio of 12 percent doesn't sit comfortably
with anybody," said Andrew Wilkinson, senior market analyst at
Interactive Brokers Group in Greenwich, Connecticut.
He called the deficit forecast "a massive predicament" that
could sour global investors on the UK market as a whole.
But BNP Paribas' Galy said the sterling sell-off was
probably overdone and the currency stood to rebound in the near
term, particularly if recent optimism is sustained and stocks
The market mood in the coming days is likely to be driven
by the outcome of the stress tests U.S. authorities are
conducting at major banks. Officials are expected to release
some details on Friday, though full results are not expected
until May 4.
Treasury Secretary Timothy Geithner said this week that
most U.S. banks have enough capital to keep lending, but a pile
of bad debts is feeding doubt about their health and slowing a
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