Yen Higher Against Rivals as Risk Aversion Builds

 
   By Hiroyuki Kachi 
 

        The yen climbed against its major rivals in Asia on Wednesday amid growing risk aversion in global financial markets, with stock-market weakness and a continued falloff in oil prices pushing investors into the perceived safe haven of the Japanese currency.
        The dollar fell to a fresh low of Y117.28, its weakest since Oct. 17, before slightly recouping losses to Y117.31 as of 0450 GMT. That was still lower than Y117.84 late Tuesday in New York.
        With growing risk aversion on falling oil prices weighing on the stock market, investors parked money into the safety of the yen, which tends to retain its value in times of financial turbulence.
        Having lost 1.5% at midday, the Nikkei Stock Average extended losses in the early afternoon. That deepened the sense of risk, leading to more yen-buying later in the session.
        "We may have to wait until February to see a recovery in risk-taking sentiment," said Junichi Ishikawa, market analyst at IG Securities.
        He said recent patterns in the U.S. stock market showed adjustment phases tend to last two to four weeks, suggesting the current lackluster performance since earlier this month may persist until early next month. That could coincide with a winding down of political turbulence in Greece, he said.
        He expects the yen to return to a weak tone with a resurgence in global stock markets around the first half of February.
        The euro slid to Y138.15 as of midday in Tokyo, its lowest since Oct. 31, before recovering to Y138.25, below the overnight level of Y138.74. Against the dollar, it was slightly higher at $1.1785 from $1.1772.
        The single currency is vulnerable to downside weakness, especially ahead of the European Central Bank's policy-setting meeting Jan. 22, when the ECB is widely expected to announce a large-scale asset-purchase program, known as quantitative easing.
        ECB executive board member Benoit Coeure said in an interview published Tuesday that the central bank is in a position to make a decision on a government bond-buying program, but that doesn't necessarily mean it will do so.
        In addition to the oil price decline, a falloff in prices of commodities such as copper led to selling of commodity-linked currencies such as the Australian and New Zealand dollars. Copper prices have plunged to their lowest in more than five years in the wake of plummeting oil prices.
        The Australian dollar lost ground against the yen to as low as Y94.83, its lowest since Oct. 28, before recovering to Y95.06. The Aussie also weakened to as low as $0.8077.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.04% at 84.01.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        January 14, 2015 00:48 ET (05:48 GMT)

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