The exchange rates of the American and European currencies sharply fell against the Japanese yen on global markets last week, with the dollar weakening due to anemic economic indicators, while the euro is under pressure due to the Greek debt crisis.
Last week, the dollar index, which shows the value of the American dollar against six major world currencies, fell by 0.40 percent to 80.31 points, after reaching its highest level in the last eight months – 81.34 points a week earlier. At the same time, the dollar weakened by 0.33 percent against the European currency, causing the price of the euro to rise to 1.3640 dollars. In relation to the Japanese currency, the dollar’s exchange rate plummeted by 2.95 percent to 88.90 yen. The European currency also weakened against the Japanese yen by 2.70 percent, causing its price to dive to 121.19 yen. At one point, it sank to just 120.44 yen, the lowest level in a year.
In a report to Congress last week, the chairman of the U.S. Federal Reserve, Ben Bernanke, stated that key interest rates will remain unchanged at the historically low levels of 0 to 0.25 percent for some time, dispelling speculation that the recent increase in the discount rate charged by the Fed on emergency loans to banks represents the beginning of a tightening of monetary policy. Due to this, as well as weak economic data, including a sharp decline in home sales, a drop in consumer confidence, and rising unemployment in the U.S., the dollar has come under strong pressure. On the other hand, the yen is strengthening due to signs of accelerating growth in local industry and consumer spending, but also due to uncertainty in global stock markets, which leads investors to seek refuge for capital in safer investments, such as the Japanese currency. The euro, on the other hand, remains under pressure from fiscal problems in Greece, while waiting for that eurozone member to offer 10-year government bonds on the market to repay maturing debts.
