Yen Hits 1-Month High as Putin Sparks Haven Asset DemandJoseph Ciolli
The yen increased to its strongest level in almost a month versus the dollar after Russia took control of Crimea, intensifying concern of a conflict with Ukraine’s government and boosting demand for haven assets.
Japan’s currency climbed against all of its 16 major peers as U.S. Secretary of State John Kerry is traveling to Kiev after discussing sanctions against Russia and European Union foreign ministers will hold an emergency meeting. The Swiss franc advanced to a one-year high versus the euro while the Russian central bank unexpectedly raised interest rates as the ruble plunged to a record. Norway’s krone and Sweden’s krona fell after manufacturing PMI in both countries fell short of economists’ estimates compiled by Bloomberg.
“Yen strength is being driven by haven flows,” Richard Franulovich, the chief currency strategist for the northern hemisphere at Westpac Banking Corp., said in a phone interview. “Anything that’s remotely attached to the geographical world around Ukraine has underperformed today.”
The yen climbed 0.3 percent to 101.45 per dollar as of 5 p.m. in New York after reaching 101.20, the strongest level since Feb. 5. It added 0.8 percent to 139.33 per euro after increasing 1 percent, the most since Jan. 31. The 18-nation currency slid 0.5 percent to $1.3735.
The Norwegian krone depreciated 0.7 percent to 6.0481 per dollar after slipping the most since Jan. 30. Sweden’s krona fell 1.1 percent to 6.4761 per dollar.
An index based on a survey of purchasing managers in Norway fell to 51 from 52.8 the previous month, missing the forecast of 52.5. A similar gauge for Sweden declined to 54.6 from 56.4 in the prior period, falling short of an estimated 55.
The Swiss franc gained 0.2 percent to 1.21294 per euro after appreciating to 1.21044, according to data compiled by Bloomberg, the strongest level since Jan. 10, 2013. To safeguard the economy from deflation and a recession, the Swiss National Bank, the Zurich-based central bank, set a cap of 1.20 per euro on the franc in September 2011
The ruble weakened 1.5 percent to 42.6570 against Bank Rossii’s target basket of dollars and euros after touching a record-low 42.754. Russia’s central bank raised its benchmark one-week auction rate to 7 percent from 5.5 percent effective 11 a.m. Moscow time.
“The decision is intended to prevent inflation and financial-stability risks connected with the recent high volatility in the financial markets,” the central bank said.
JPMorgan Chase & Co.’s Global Volatility Index rose to 7.85 percentage points, touching the highest since Feb. 14.
President Barack Obama contacted overseas leaders on how to respond to the Russian incursion, which prompted Ukraine to mobilize its army reserves as it seeks international economic aid. Ukraine said over the weekend an invasion would be “an act of war.”
“It’s all about Ukraine,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc., said in a phone interview. “The underperformers are the higher-yielders. Investors are looking at the dollar and yen as their main safe havens so far, and the Swiss franc is also performing relatively well.”
A custom Bloomberg index with equal weightings of seven commodity currencies declined 0.4 percent. The gauge’s monthly gain of 1.1 percent for February was the biggest since December 2012. An increased level of volatility raises the risk of unexpected price moves, spurring investors to avoid the higher-yielding commodity bloc.
Australia’s dollar appreciated 0.2 percent to 89.38 U.S. cents after falling to 88.91, the lowest since Feb. 5. New Zealand’s currency dropped 0.2 percent to 83.71 U.S. cents.
South Africa, another commodity-linked nation, saw its rand depreciate 1.3 percent versus to 10.8964 per dollar.
South Korea’s won fell after the country’s defense ministry said the communist north fired two short-range missiles off its east coast today. The won fell 0.2 percent to close at 1,070.13 per dollar in Seoul after depreciating to 1,075.14, the weakest level since Feb. 24.
China’s yuan extended its biggest monthly loss on record as weaker-than-forecast manufacturing data added to signs of a slowdown in the world’s second-largest economy. The currency weakened 0.02 percent to close at 6.1462 per dollar in Shanghai, according to China Foreign Exchange Trade system prices, after falling as much as 0.2 percent.
Trading in over-the-counter foreign-exchange options totaled $49 billion, from $69 billion on Feb. 28, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-Chinese yuan exchange rate amounted to $9 billion, the largest share of trades at 19 percent. Dollar-yuan options trading was 3 percent more than the average for the past five Mondays at a similar time in the day, according to Bloomberg analysis.