Yen Best Performer on Trading Restrictions

The yen outperformed most of the 16 main traded currencies after the U.S. President affirmed that financial institutions must have their operations regulated in order to avoid speculations, raising risk aversion in all trading markets in the world.

Risk aversion rose further as the U.S. is likely to follow China’s measures to tighten loan conditions preventing a new credit bubble, decreasing risk appetite in currency markets and allowing the Japanese yen to rally versus most of the main traded currencies this Thursday in foreign-exchange markets. The White House statements done by President Barack Obama were definitely not welcome among traders, as he proposed certain restrictions and even prohibitions for banks in the country invest in hedge funds and other types of investment that could cause harm to financial systems in the long run. Emerging market currencies were the most affected by these statements.

Measures to be taken by governments around the world to avoid another credit crunch are affecting traders’ sentiment and risk aversion is more prevalent since China announced its lending restrictions, that’s positive for the yen, according to analysts. If Obama’s proposals become reality in their totally, more periods of risk aversion are likely to follow.

CAD/JPY tumbled to 85.89 as of 20:36 GMT from a previous rate of 87.22 yesterday. CHF/JPY declined to 86.66 from 87.39.

If you have any questions, comments or opinions regarding the Japanese Yen,
feel free to post them using the commentary form below.