Will fear of automaker bankruptcies cause a flight to safety?
*Reuters, by Steven C. Johnson, March 30, 2009
“The dollar and yen rallied on Monday as fears of bankruptcy for U.S. automakers General Motors and Chrysler prompted anxious investors to cut exposure to risk and seek safety in the U.S. and Japanese currencies.
The euro continued to retreat from last week’s two-month high above $1.37, falling below $1.32 after Spain was forced to take over a regional savings bank, its first rescue since the financial crisis began, and Hungary’s credit rating was cut.
That added to selling by those anticipating a cut in euro zone interest rates this week and increased the appeal of the dollar and yen, which tend to rise in times of trouble as investors repatriate funds from higher-yielding currencies and relatively riskier assets such as stocks.”
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