The Yen fell broadly on Tuesday after billionaire Warren Buffett offered to assume troubled bond insurers' liabilities, increasing investor appetite for risky assets such as stocks and high-yielding currencies. Buffett told CNBC television that the plan of his Berkshire Hathaway company would cover $800 billion in municipal bonds, a step that investors hope might ease recent credit market turmoil. The move reignited risk appetite, sparking a global stock markets rally and sending the low-yielding Yen tumbling across the board. Investors often use the Yen to fund acquisitions of higher yielding assets and currencies.
EurJpy jumped to a session high of 157.02 yen, before retracing slightly to trade at 156.53, still1.05% higher on the day. EurChf firmed 0.51% to 1.6069. UsdJpy firmed 0.49% to 107.35. EurUsd raced to a session peak of 1.4615, before easing to 1.4580 -- up about 0.54% percent from late Monday.
Bond insurers guarantee more than $2.4 trillion of debt and have been struggling to hold on to their top credit ratings after suffering heavy losses from backing mortgage securities that have plunged in value. Markets worry that downgrades would rattle credit markets further and set off more large write-downs on Wall Street. Low yielding currencies such as the JPY and CHF tend to attract flows during periods of uncertainty as their low interest rates reflect the capital surplus of their respective countries. GbpUsd climbed 0.53% to 1.9598.
Analysts said again that the European Central Bank will cut interest rates later this year to counter slowing economic growth.