Yen picks up on Middle East tensions

 04 Jan 2016 - 9:26

Yen picks up on Middle East tensions
 

Tokyo: The yen on Monday hit its highest level against the dollar since October as traders moved into the unit due to rising tensions in the Middle East.

Saudi Arabia severed diplomatic ties with its old foe Iran Sunday after protesters ransacked its embassy in Tehran in response to the execution of a Shiite cleric.

The developments are the latest to inflame the region and add to a list of negative news that hurt world markets over the past year, including China's economic malaise, plunging oil prices and anaemic global growth.

"Most investors expect the tension between Iran and Saudi Arabia will be contained and limited," Win Udomrachtavanich, chief executive officer at One AssetManagement, told Bloomberg News.

"Still, it becomes the big risk for the financial markets today."

The yen is often seen as a secure investment in times of economic and geopolitical uncertainty.

In Tokyo, the dollar dropped to 119.44 yen, its lowest in more than two months, and down from 120.57 yen in New York late Friday.

The euro also slipped to 130.06 yen from 131.59 yen, while it rose to $1.0894 from $1.0855 in US trade. 

Weak Chinese manufacturing data dented the Australian dollar, which dropped 1.22 percent against the US unit, while the New Zealand dollar was down 1.85 percent.

"The (Chinese figures) provided bears with another reason to sell the Aussie, as a tentative revival took a step back in December," said Sean Callow, foreign-exchange strategist in Sydney at Westpac Banking Corp.

"For now, we can only hope that China's industrial slowdown is stabilising, since an actual recovery still appears to be over the horizon. There is definitely broad USD strength."

Also Monday China cut the yuan's value against the greenback, making it weaker than 6.5 for the first time in more than four-and-a-half years, with pressure mounting on the world's number two economy from a growth slowdown.

The South Korean won weakened 1.10 percent against the dollar, while the Malaysian ringgit declined 0.94 percent.

The Philippine peso was off 0.43 percent as the Indonesian rupiah fell 0.51 percent.

?AFP