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FX round-up: Risk aversion lifts dollar, yen

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Date: Monday 13 Oct 2008

LONDON (ShareCast) - Increased risk aversion buoyed the dollar Friday, which rose against most currencies apart from the yen and the Swiss franc.

The global market rout prompted large-scale panic among investors who dived for cover in perceived safe haven currencies.

Sterling slumped to a five year low at $1.6737 against the dollar Friday before regaining some ground before the close of the session. The pound’s decline comes as investors switch out of higher yielding currencies.

The euro fell over 8% against the Japanese yen over the week as traders sought out the Asian currency as the carnage continued on the world’s stock markets.

Friday saw sharp losses on the major European indexes in France and Germany, while Japan’s Nikkei slumped over 9% as panic gripped the markets.

The Group of Seven nations meeting started on Friday in Washington and more policy measures are expected, aimed to restore some confidence in the financial systems and global markets.

President Bush said the government was looking at more ways to “resolve the current crisis.”

Monday sees US, Japanese and Canadian markets closed for a holiday.

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