People were concern that Stock market is going down on Subprime mortgage concern . So Bernanke decided to comment on the subprime mortgage. His comment led the stock Market higher and there was reaction in forex market as well Yen gain against dollar where as Euro and Pound fall. Bernanke offered relief to market by assuring that proper steps will taken to avoid in crisis in financial market. People who were thinking of increasing their cash position will be force to take position again. Speaking at the annual monetary policy symposium in Jackson Hole, Wyoming, Bernanke said financial markets can have economic effects 'felt by many outside the markets'. The Fed will 'act as needed to limit the adverse effects on the broader economy' that may arise from the recent turmoil on financial markets. Although there was sufficient evidence that the fed will support the market but also he made it clear that it is 'not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions. Euro was trading at 1.3637 usd down from 1.3666 at 3.17 pm BST.
while the pound fell to 2.0118 usd from 2.0163 previously.
Against the yen meanwhile, the dollar fell to 116.11 from 116.30.
Thomson IFR Markets analyst Rhonda Staskow said the remarks have two aspects to them - on the one hand it is positive for markets that the Fed is ready to provide more liquidity as necessary. However, the comment that it is not the Fed's jobs to protect lenders and investors will 'dampen the hope of those looking for the Fed to bail them out'.
'This has fuelled expectations that the impact of the credit crunch and housing crisis will continue in weeks to come,' she said.
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