Yen Strengthens Against Dollar, Euro, as China Stocks Fall Again

 
   By Hiroyuki Kachi 
 

        The yen strengthened against the dollar and euro during Asian trading hours Wednesday as another sharp drop in Chinese stocks prompted investors to seek safety in the Japanese currency.
        The Shanghai Composite Index was down as much as 8.2% in early trading, despite efforts by the Chinese government to stanch a multi-week slide.
        "The China stocks falloff is the biggest market mover," said Toshihiko Sakai, senior manager of the forex and financial products trading division at Mitsubishi UFJ Trust and Banking in Tokyo.
        Investors are also keeping jittery eyes on headlines related to last-minute talks to keep Greece in the eurozone. The currency bloc's leaders set Greece a Sunday deadline to reach an outline for a new financing deal that the German chancellor said would have to include overhaul measures dropped from negotiations in recent months.
        The dollar fell as low as Y121.96 before picking up slightly to Y122.08 at around 0450 GMT. It was trading at Y122.56 late Tuesday in New York--above a low of Y121.70 set Monday after Greek voters rejected international creditors' bailout conditions in a weekend referendum, roiling financial markets.
        Despite the yen buying on investors' risk aversion, "we can also see buying (on dips) around the Y121 level," said Mr. Sakai.
        Investors generally regard the Japanese currency as a safe haven asset that retains its value during periods of geopolitical or financial instability.
        Despite the dollar's fall against the yen, the currency pair is still positioned in its recent range, Mr. Sakai said.
        "Volatility is getting higher...but I think (the pair is) not out of this range," he said, adding that the dollar had downside support around Y121.70.
        The euro also fell against the yen, reaching as low as Y133.96 before rebounding slightly to Y134.33 at midday. The Australian dollar fell to Y90.44 from Y91.33, while the British pound weakened to Y188.46 from Y189.47.
        The Shanghai Composite was last down 3.9%. Meanwhile, the benchmark Nikkei Stock Average was down 2.8% at midday after falling below 20000 for the first time in about three weeks.
        In other currency trade, the U.S. currency was higher against the euro, which fell to $1.1005 midday, compared with $1.1012 overnight.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.03% at 87.62.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        July 08, 2015 01:19 ET (05:19 GMT)

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