Date:18/03/2008 URL: http://www.thehindubusinessline.com/2008/03/18/stories/2008031852221400.htm

Back Unwinding of positions seen as $ weakens

Our Bureau

Kolkata, March 17 Yen and Swiss franc firmed up on Monday as risk aversion dogged the global financial markets. Investors reduced exposure to risky assets and unwound trades funded by the Japanese and Swiss currencies. Yen and Swiss franc have been playing the carry-trade catalysts in all derivatives and, particularly in, alternative assets.

The yen reached near eight-year highs against the dollar while the Swiss franc rose to roughly two-year high against the euro and was close to its record high against the greenback.

Currency traders were apprehending 100-yen level against the greenback shortly, which may further complicate the currency trade unwinding and losses could be more widespread.

Meanwhile, currency traders in Mumabi said that more of the listed private sector banks and companies, which were hyper active in currency market though treasury operations, were understood to have made further losses on strengthening of yen and Swiss franc.

Goldman Sachs said in a research note Monday that an emergency Fed cut is possible ahead of March 18. It changed its view on Fed policy on Friday after the US payrolls data.