Yen Slide Fades as Global Turmoil Highlights Its Haven Appeal

  • Impact of BOJ negative rates gives way to risk aversion
  • Aussie falls as RBA holds rates, says it's weighing turmoil

The Bank of Japan-induced yen selloff is proving hard to sustain, with the currency advancing against most of its major counterparts on Tuesday as a retreat in oil and stocks boosted demand for safer assets.

The Aussie fell for the first time in six days after the Reserve Bank of Australia kept interest rates at a record low and said it will weigh the impact of global turbulence in deciding whether to ease policy in the future. New Zealand’s dollar slumped and the South African rand headed for its biggest drop in more than two weeks. European equities slid with their Asian peers and futures signaled more losses when U.S. markets open, boosting demand for the yen.

“People have sat back and digested the BOJ action on Friday and are slowly coming to the view that the policy changes are more incremental and shouldn’t lead to a sustained weakness in yen given the volatility in financial markets,” said Peter Dragicevich, a foreign-exchange strategist at Commonwealth Bank of Australia in London.

The yen’s haven status is re-asserting itself even after the BOJ sent it tumbling by the most in a year on Jan. 29 by introducing negative interest rates. While Japans’ current-account surplus makes it attractive for investors seeking safety, currencies such as the Australian and New Zealand dollars are suffering amid a China-led global slump.

Back-to-Back

The yen gained 0.2 percent to 120.81 per dollar as of 7:11 a.m. in New York, set for its first back-to-back gains in more than three weeks. Its 1.9 percent drop after the BOJ announcement on Friday was its biggest in more than a year.

Japan’s currency weakened 0.2 percent to 131.95 yen per euro, falling for a ninth day. The euro climbed 0.3 percent to $1.0923.

Australia’s central bank kept its benchmark cash rate at 2 percent as forecast by all except one of 29 economists surveyed by Bloomberg.

Australia’s dollar tumbled 0.8 percent to 70.57 U.S. cents, while its New Zealand peer dropped 0.9 percent to 64.87 cents. The rand slid 1.1 percent to 16.0719 per U.S. dollar, its biggest loss since Jan. 15.

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