JPY showing very significant Strength the past 3 days. ------ ECB's Weber-not proved that carry trades drive yen
Thursday, February 15, 2007 6:37:27 AM (GMT-06:00)
Provided by: Reuters News
FRANKFURT, Feb 15 (Reuters) - Carry trades are not necessarily responsible for the weak yen, European Central Bank Governing Council member Axel Weber was quoted as saying on Thursday.
In an interview with news agency dpa-AFX, Weber also repeated a warning from Group of Seven meetings last weekend that markets should note the risks from one-way bets.
"It is not yet proven that carry trades are responsible for the exchange rate developments," he said, referring to the weakness in the yen.
Research by the Bundesbank, which Weber heads, suggested foreign exchange developments influenced market positioning, not only the other way around, he said.
Carry trades are when dealers borrow in a low interest rate currency, such as the yen, then sell those funds to buy a higher-yielding currency.
Discussions with Japan's central bank governor and finance minister at the G7 talks showed that Japan's economy was recovering, in line with ongoing growth in the global economy.
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