On Friday, during Asia trade, the major Japanese currency grew against its key competitors, thus reaching its highest against the euro in two years, not to mention a one-week high against the greenback, as market participants kept looking for refuge in traditional safety of the yen.
The yen managed to strengthen against the greenback, which dropped to ¥125.39 in Tokyo, late in the morning. That was its lowest result since June 14 2013. Then, the US dollar leapt back to ¥125.48.
Following obvious weakness in crude prices and American shares overnight, the benchmark Nikkei Stock Average dipped, thus boosting huge demand for safe-havens, including the yen. By midday, the benchmark sagged 2%.
Apart from oil fall, which make the major European currency quite vulnerable to selling pressure, expectations that in March the ECB is going to launch more stimulus also resulted in a weaker euro.
The Japanese yen has always been considered to be a reliable safe-harbor during troubled times, but Tokyo-based analysts noted that the recent yen buying actually went beyond the usual necessity for a safe-harbor.
Though current sentiment hasn’t turned solely into a risk-off mode, the yen is already demonstrating quite clear signs of its strength.