Yen weaker on Australia rates

A decision by the Reserve Bank of Australia to leave interest rates at 3.25 percent against expectations of a reduction in rates increased investor appetite for risk and contributed to a weakening of the yen Tuesday, although after Wall Street saw declines in morning trade the Aussie gave back some of its gains against the yen and the US dollar.

In addition to the heightened risk appetite, Japan’s currency was hurt by reports that carmaker Toyota (TYO: 7302; NYSE: TM; LSE: TYT) will report its first loss in almost 60 years and could ask for $2 billion in loans from the government.

The Australian currency was also helped by a narrower current-account deficit in the fourth quarter, by a gain of 0.2 percent in retail sales in January over December, while a report due tomorrow is expected to show that Australia’s economy expanded by 0.2 percent in the fourth quarter.

In late morning trade in New York, the Australian dollar was worth 63.83 cents US while the yen traded at ¥62.7465 to the Aussie.

New Zealand’s dollar, on the other hand, held on to its gains as it was worth 49.58 cents US and ¥48.758.

The US dollar and the euro were both higher against the yen, with the yen trading at ¥123.2201 to the euro and at ¥98.305 to the greenback.

The pound, meanwhile, weakened against the euro on sentiment that the Bank of England will cut UK interest rates to 0.5 percent at Thursday’s meeting of the Bank’s Monetary Policy Committee.

At nearly 11:30 a.m. in New York, the pound traded at 89.43p to the euro while it took $1.4015 to buy a pound.

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