Japanese Yen Falls as Chinese Stocks Rally

By James Ramage 

        The Japanese yen fell versus the U.S. dollar and the British pound on Thursday as a rally in Chinese stocks encouraged some investors to move back into assets perceived as risky.
        The yen slid 0.5% against the greenback, with one dollar buying Yen121.32 in late-afternoon trade, halting a five-day rally. The yen fell 0.8% versus sterling, as one pound bought Yen186.54.
        The Japanese currency, which tends to strengthen in times of market uncertainty or volatility, fell on Thursday after the Shanghai Composite gained 5.8% during the trading session. The smaller Shenzhen market increased 3.8%. Both indexes have shed about one-third of their value over the past month.
        The selloff in Chinese shares and the government's difficulties in stopping the losses have raised broader concerns about the world's second-largest economy and global growth.
        The yen's decline could be temporary, as some analysts worry that Thursday's stock-market rally stemmed less from improving economic fundamentals in China and more from regulatory changes put in place to halt the equities meltdown, said Brian Daingerfield, currency strategist at RBS Securities.
        "The fact that Chinese equities rebounded has given investors more breathing space to head into riskier assets, allowing currencies to rise against the yen," Mr. Daingerfield said. "But there are still growth concerns in China that go beyond everyday moves in the stock markets, which have greater implications for commodity prices and the currencies of countries that are linked closely to China by trade."
        In other trade, the euro fell 0.4% against the dollar to $1.1031, as investors shifted bets ahead of a European Union meeting that may be decisive for Greece's debt crisis and the country's fate in the 19-member eurozone.
        (END) Dow Jones Newswires

        July 09, 2015 17:20 ET (21:20 GMT)

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