Weekend Economists Examine (E)sc(h)atology January 24-26, 2014

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32. Yen Rallies With Franc on Rout in Amid Emerging Markets

http://www.bloomberg.com/news/2014-01-24/yen-set-for-biggest-weekly-gain-since-september-on-haven-demand.html

The yen and the Swiss franc rallied as a selloff in emerging-market currencies deepened, stoking demand for haven assets.

The yen strengthened against all but two of 174 global peers as increased scrutiny of credit risks in China supported demand for Japanese assets. Argentina’s peso was the fourth worst global performer after a 13 percent slump yesterday as the country devalued the currency. The dollar was underpinned by speculation the Federal Reserve will continue to scale back stimulus. Turkey’s lira slid to a record and Russia’s ruble fell to a five-year low.

“We’re having a risk-off move,” Douglas Borthwick, the head of foreign exchange at Chapdelaine & Co. in New York, said in a phone interview. “Japan and Switzerland are both very interested in weakening their currency, so you’d expect that any sort of pullback in dollar-yen or dollar-Swiss would be bought into, which is why they’re seeing strength today.”

The yen rose 0.9 percent to 102.31 per dollar at 5 p.m. New York time after reaching 102, the strongest level since Dec. 6. It appreciated 1 percent to 139.98 per euro. The franc gained 0.3 percent to 89.45 centimes per dollar and added 0.4 percent to 1.2235 per euro.