Yen Drops on Toxic Assets Disposal

The Japanese yen declined against the other major currencies today as the Forex traders speculated that the U.S. plan to buy out the toxic assets is going to hurt the «safe haven» currencies, spurring the risk-hungry carry trade.

During the early Asian trading session the U.S. dollar was also bearish against the euro and the pound as the investors dumped it in favor of the more riskier assets. As of now the dollar is rising against the euro as the confidence in the U.S. economy is rising after the American administration unveiled the long-awaited plan to remove the bad debt from the private financial system.

The yen, on the other hand, is very vulnerable to any news that eliminate the risk-aversion. The Japanese economy has already suffered more than U.S. from the ongoing crisis and the only advantage the yen can offer is a safety, which is quite vague and isn’t very sought by the traders when there is chance for the stable carry trade opportunity.