Yen boost as risk currencies take drubbing

The yen kept a hold of overnight gains in Asia on Friday having gone up across the board with investors giving risk currencies such as the Australian dollar a wide birth because of concerns about the global economy’s health, reports Reuters.

Surveys on Thursday revealed that manufacturing shrank for a fifth consecutive month in China, while manufacturing activity in France and Germany – the two biggest economies in Europe – suffered big declines.

This prompted investors to shed growth-linked currencies and turn to the safe-haven yen, which went up against the dollar, Aussie, kiwi and euro. The dollar dropped by over a per cent yesterday to a week-and-a-half low of 82.3 yen, before clawing back a bit of ground to close at 82.60.

Societe Generale strategist Vincent Chaigneau said that fears are on the rise of a Chinese hard landing, but that they feel they are overdone. He added that concerns over Europe are coming to the fore again, rightly so due to the weak economy and toxic focus on growing the firewall.

However, the euro remained surprisingly resilient against the dollar, coming back from a low of $1.3133 to close at $1.3199. But analysts from BNP Paribas anticipate that the single currency may fall further.