The Japanese yen gained today against its usual carry trade counterparts as the markets worried about the Lehman Brothers loss, which might be signaling for a financial crisis deepening.
The carry trade was at its uprise last two-three weeks as the subprime crisis has been fading out and investors started to seek more risky assets. Yen was used as a short currency in the carry trade positions against such high-yielders as the pound, Australian and New Zealand dollar.
According to a report by the Wall Street Journal, the investment bank Lehman Brothers will probably need to raise as much as $4 billion in capital to cover the its first quarterly loss since the companys IPO. This spurred speculations that the subprime lending crisis is still hurting the U.S. economy.
The yen usually gains when global stock markets weaken as the traders prefer to cut the risks associated with their carry trade positions. Today Asian stock markets ended with a fall; Nikkei was down 1.8 percent.
USD/JPY dropped from 104.39 to 104.23 as of 9:19 GMT with a daily minimum at 103.87. GBP/JPY went down from 205.28 to 205.15 with a minimum at 203.96.
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