September 19, 2013
The yen tumbled, reaching the weakest level in almost four years against the euro, as the Federal Reserve unexpectedly retained a monetary policy that prompts investors to borrow in low-interest-rate currencies to buy higher-yielding assets.
Japan’s currency slid against all 16 of its major peers after a central-bank policy maker said pressure may mount to expand stimulus. The dollar fluctuated against the euro after falling to a seven-month low as Fed policy makers maintained monthly bond purchases at $85 billion. Malaysia’s ringgit surged the most since 1998 and India’s rupee advanced. The pound weakened after U.K. retail sales unexpectedly fell.
“Carry trades are being carried out in a selective fashion,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, said in a phone interview. “The large bearish long-dollar/short-Group of 10 currencies are being unwound.” A long position is a bet that an asset will increase in value.