With the United States’ mortgage problems trickling into Europe, many investors have been thrown into a panic. However, the Japanese have reduced their high-risk investments, moving funds back into the reliable yen. As a result, the yen is fairing much better than other currencies. Those who have suffered from this sudden scramble include New Zealand and Australia. According to Forbes:

The increasing pressures in credit markets — with the European Central
Bank yesterday injecting 95 bln eur to boost liquidity in euro money markets — came on fears that the US subprime mortgage troubles may be spreading to Europe. Several banks admitted exposure to subprime markets, and BNP Paribas froze three asset-backed funds. This caused investors to panic and cut their exposure to carry trades — the use of low-yielding currencies to fund higher-yielding investments

Read more: Yen still strong on risk aversion