On Friday, Asian afternoon trade witnessed strengthening of US dollar against the Yen. The budge followed the purchase of Japanese currency and greenback by investors.
Following the speculation of Fed cut rates by 75 basis points near the closing of the month, the week saw fall of dollar to 105.92 yen. The fall has been the lowest in last three years.
Talks of implementing economic package of 150 billion dollar (including tax breaks and higher spending), to encourage the unhurried economy, by the bush administration has triggered the dollar.
The long weekend has also led to the purchase of dollar by investors, as the Martin Luther King holiday of 21st will keep US economic market closed for three days.
In afternoon, Dollar traded at 107.07 yen high compared to 106.61 at the morning in Sydney. Whereas, variations were seen in Euro as it was traded at 1.4644 instead of 1.4643.
Treasury economist united overseas bank, Thomas Lam, said profit taking and position changes are being speculated due to recent selling of dollar in high intensity. The economist also believes that US dollar hasnâ€™t completely recovered and has still some burden on it.
Heavy loss from Merrill Lynch as well as the 2.5 percent drooping of the Dow Jones Industrial Average raised the panic and fear of collapse, causing the investors to search for a safe bet.
John Noonan, analyst Thompson IFR, believes the panic and disturbance among investors shows that there are hardly any chances of further opening-up of long currency positions and risk strategies by Japanese and US investors. Also, the ensuing ouster flows are expected to hold US dollar and Yen against Australian and European currencies (Australian dollar and euro).
Australian dollar was being traded at 87.65 US cents from 87.88
The chances of threatening deceleration of worldwide economic output weakening the Australian currency, has made investors cut down any bets on increase in interest rates by Australia.