The yen climbed against all of its 31 major counterparts as investors sought a haven after crude oil resumed a selloff, damping appetite for riskier assets.
The ruble slid to a record, and an index of emerging-market currencies dropped to the lowest level in more than a decade. The dollar rose against the euro before the Federal Reserve starts a two-day meeting tomorrow where Chair Janet Yellen and other policy makers will consider a vow to hold interest rates low as they consider when to raise them next year.
“We’ve seen a significant supply shock in oil, and at the same time, demand remains relatively weak,” Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, said by phone.
The yen strengthened 0.8 percent to 117.82 per dollar at 5 p.m. New York time, appreciating for the first time in three days. The euro fell 0.2 percent to $1.2437 and dropped 1 percent to 146.53 yen.
A gauge of price swings jumped to a 15-month high. JPMorgan Chase & Co.’s Global FX Volatility Index rose to 9.74 percent, the highest on an intraday basis since September 2013. It closed at a record low of 5.29 percent on July 3.
Crude dropped 4.3 percent to $55.32 a barrel in New York and touched $55.02, the lowest since May 2009, after the United Arab Emirates said OPEC won’t rein in production even if prices fall to as low as $40 a barrel. The Bloomberg Commodity Index also reached a five-year low. The Standard & Poor’s 500 Index fell as much as 1 percent.
Bank of Japan
“Oil is definitely driving things,” Brad Bechtel, managing director of Faros Trading in Stamford, Connecticut, said in an e-mail. “Equities were bouncing initially, and then oil turned and equities followed, as did the dollar.”
Japan’s currency rose as traders locked in profits after Prime Minister Shinzo Abe won electoral backing for stimulus policies that have driven the yen to the weakest in seven years. Abe’s ruling Liberal Democratic Party and its coalition partner gained more than two-thirds of the 475 seats in the lower house.
The yen has tumbled almost 30 percent in the past two years as Abe implemented fiscal spending and structural reforms and the Bank of Japan applied unprecedented monetary stimulus to battle deflation.
Abe’s victory didn’t stop Japanese stocks from slumping. The Topix index fell 1.5 percent to close at its lowest level in a month as global equities dropped amid the oil rout.
The Bank of Japan meets Dec. 18-19. The central bank kept policy unchanged in November after unexpectedly increasing monetary stimulus on Oct. 31.
Russia’s central bank raised its key interest rate to 17 percent from 10.5 percent after markets closed, according to its website. The ruble tumbled the most since 1998, weakening past 60 per dollar for the first time as traders tested the nation’s willingness to defend the currency. The ruble slid 10.2 percent to 64.2372 a dollar. The economy of the world’s biggest energy exporter is set to shrink 0.8 percent in 2015, the government said this month.
“The collapse of the ruble has intensified amid falling oil prices and a central bank that failed to deliver a decisive actions to counteract the ruble decline,” Bernd Berg, a London-based emerging-market strategist at Societe Generale SA, said in e-mailed comments. “Russia is facing the risk of a currency and confidence crisis.”
A Bloomberg index of 20 emerging-market currencies reached the lowest level in records dating to 2003.
Brazil’s real sank to a nine-year low as data showed Latin America’s biggest economy unexpectedly contracted in October, adding to concern President Dilma Rousseff will struggle to revive growth. The currency slid as much as 1.7 percent to 2.7003 per dollar, the weakest level since March 2005.
Turkey’s lira fell to a record, losing as much as 4.2 percent to 2.3944 per dollar. It dropped against all of its 31 major peers except the ruble.
The euro weakened on speculation the European Central Bank will begin buying government bonds in 2015. More than 90 percent of respondents in Bloomberg’s monthly survey of economists predict the bank will begin large-scale purchases of sovereign debt next year, up from 57 percent last month. An announcement will probably come in the first quarter, with any decision taken against the objections of some policy makers, the poll of 55 economists showed.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose as a report showed U.S. industrial production surged 1.3 percent in November, the most since May 2010.
The U.S. central bank opens a meeting tomorrow as the world’s biggest economy accelerates amid sluggish global growth. U.S. gross domestic product increased 3.9 percent in the third quarter after a 4.6 percent gain from April through June. Japan’s economy has contracted for two quarters and Europe’s is growing at less than 1 percent.
The U.S. consumer-price index rose 1.4 percent in November from a year earlier, versus a 1.7 percent gain the previous month, economists surveyed by Bloomberg forecast before the government reports the data on Dec. 17. The central bank’s target for the annual inflation rate is 2 percent.
Fed officials will discuss whether to retain a pledge to keep rates low for a “considerable time.”
The central bank has kept the benchmark interest rate in a range of zero to 0.25 percent since 2008 to support the economy.
“It’s a very delicate dance,” Douglas Borthwick, the head of foreign exchange at New York brokerage Chapdelaine & Co., said by phone. “If you take out ‘considerable time,’ you’re changing the time, without actually pulling the trigger.”