The yen made its biggest rise in ten week against the dollar on Tuesday as investors showed signs of moving away from carry trades.

Trading between the yen and US currency peaked at 123.26  on the Tokyo markets, a gain of 0.3 per cent.

Wednesday morning saw the yen further strengthen its position to 122.80 as the markets reacted to pessimistic predictions regarding the US subprime mortgage sector

Carry trading is the practice of borrowing in a country with low interest rates - and Japan has some of the lowest in the developed world - and then investing in higher yield economies.

However, investors were yesterday advised to be aware of the risks of making "one-way bets" by Japanese finance minister Koji Omi, in what the markets have interpreted as a warning that the carry trade in yen may be due to weaken.