The euro gained as the Bank of Japan said it will begin accepting BBB rated corporate debt and the Reserve Bank of Australia cut its key interest rate more than expected to the lowest level since 2002. The yen fell against the New Zealand dollar as U.S. stock futures rose, suggesting markets will rebound from the biggest rout since mid-October yesterday.
The currency shared by 15 European nations advanced to $1.2682 at 8:05 a.m. in New York, from $1.2610 yesterday. The euro bought 118.28 yen from 117.51 yen. Against the dollar, the yen was at 93.25 from 93.19.
The euro fell earlier against the yen and the dollar after the Standard & Poor’s 500 Index’s 8.9 percent decline yesterday. The Nikkei 225 index closed down 6.4 percent today, while Europe’s Stoxx 600 advanced 0.6 percent, reversing an earlier drop of as much as 2.3 percent. Futures on the S&P rose 1.9 percent.
The pound weakened against the euro after former Bank of England policy maker Willem Buiter said that the central bank will weigh the risk of a rout” in the British currency as it cuts its interest rate to an all-time low this week.
The yen rose to a five-year high versus the dollar earlier as investors reversed so-called carry trades. In such transactions, traders borrow funds in a country with low interest rates to buy higher-yielding ones elsewhere.
The yen’s advance is hurting exporters, although the strength in the currency isn’t a bad thing in itself, Economic and Fiscal Policy Minister Kaoru Yosano said today.