Haven Currencies Jump as Norway, Taiwan Rate Cuts Spark ConcernAndrea Wong and Rachel Evans
Franc, yen, euro gain as global economic unease increases
Yellen says she expects an interest-rate increase this year
Slowing global economic growth claimed more victims when central bankers from Norway and Taiwan cut interest rates, leading to renewed demand for the safest currencies.
The Swiss franc, yen and the euro rallied and the dollar fell as the unexpected easing moves add to investors’ anxieties about a speech Thursday by Federal Reserve Chair Janet Yellen. She said an interest-rate increase is likely appropriate later this year, in a speech in Amherst, Massachusetts.
"People need hedges, obviously they go into the yen or euro as a hedge," Peter Gorra, head of foreign-exchange trading in New York at BNP Paribas SA, said by phone.
Switzerland’s franc advanced 0.4 percent to 97.54 centimes per dollar as of 5 p.m. in New York, while the yen both gained 0.2 percent. Norway’s krone tumbled to 8.4861, its weakest since April 2002.
The dollar was little changed against the euro after initial news reports on Yellen’s speech.
The global economy is forecast to expand 3 percent this year, slower than in 2014 and the least since 2009, according to data compiled by Bloomberg. Concern growth is slowing in China, the world’s second-largest economy, has spurred volatility in financial markets and encouraged the Fed to hold U.S. interest rates near zero when it met last week.
The U.S. central bank is monitoring overseas developments, particularly in China and emerging markets, for risks that might spill over into the U.S. economy, Yellen said at the time.
“There’s a bit of risk-off sentiment,” said Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange Inc. in Washington. “The yen will likely continue to benefit from that safe-haven flight.”