The Japanese yen dove against all 16 of its top rivals as U.S. political leaders said they are advancing with negotiations to increase the debt limit in advance of the Thursday deadline, Bloomberg reports.
The monetary unit of the Pacific Rim nation dipped as U.S. senators were adamant about an agreement being within reach. A U.S. default on loan on financial obligations for the first time ever is at risk.
"I would think that the short-term reaction would be (dollar) positive, that investors would sell the yen, sell other safe havens such as the Swiss franc and buy back dollar short positions that have been put on ahead of such a deal," currency strategist Thu Lan Nguyen with Commerzbank told Reuters on Wednesday. "Thereafter people would say, well hang on a minute, maybe U.S. growth will be hurt in the fourth quarter by what's been going on for the past few days and weeks, so you may get some degree of reassessment," he added.
The Japanese yen slumped roughly 0.2 percent against the world's reserve currency one day after rising 0.4 percent.
Political leaders said they are en route to pushing up the U.S. government's $16.7 trillion borrowing limit, according to Reuters.
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