03.19.07, 1:12 PM ET
LONDON (AFX) - The yen continued to edge lower across the board as a rebound in equities sparked renewed interest in the carry trade when money is borrowed in low-yielding currencies, in order to invest in higher-yielding assets elsewhere.
The low-yielding yen and the Swiss franc have been the major casualties today, while currencies from regions with high interest rates have benefited, such as the Australian and New Zealand dollars and the pound.
'Rising US stocks continue to fuel fresh demand for carry trades,' said Rhonda Staskow at Thomson IFR Markets.
Recently, sharp falls on equity markets amid worries about trouble among US sub-prime mortgage lenders had sparked some unwinding of carry trades. Investors have begun the week by resuming them following firm US inflation data last week and solid gains in equity markets.
Trade today has seen the yen fall to near three-week lows against the Australian dollar, the New Zealand dollar and the euro, as well as one-week lows against the pound. The Australian dollar has also come close to breaching the key 0.80 level against the dollar.
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