Dubai default fears spark increase in dollar/yen options prices
LONDON – Options prices in USD/JPY sky-rocketed last week, as the market rushed to hedge further spot moves, following panic over Dubai World’s proposal to re-negotiate an estimated $59 billion bond debt last Wednesday (November 25).
According to analysts, the announcement triggered profit-taking, with traders buying back the yen, which had been used to fund currencies for carry trades, and selling equity. Yen hit a 14-year high on dollar on November 27, crossing the 85 barrier to reach ¥84.82
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