Yen's very weak­ness makes it a win­ner amid Asian rout: RBS

The Pak Banker - - 6BUSINESS -

BEI­JING: The Chi­nese cur­rency yen's surge amid a rout across Asia was aided by the 30 per­cent tum­ble it had taken since 2012 that had made it too weak to de­cline much fur­ther af­ter China de­val­ued its own cur­rency, ac­cord­ing to Royal Bank of Scot­land Group Plc.

Ja­pan's cur­rency climbed to a six-week high of 120.73 per dol­lar Mon­day as a rout in com­modi­ties and eq­ui­ties fu­eled de­mand for safer in­vest­ments. The yen is the only cur­rency in Asia that has strength­ened af­ter China un­ex­pect­edly drove down the yuan on Aug. 11. Malaysia's ring­git and In­done­sia's ru­piah tum­bled to the weak­est lev­els against the dol­lar since the Asian fi­nan­cial cri­sis of 1998, while other re­gional cur­ren­cies from the Thai baht to South Korea's won slid to multi-year lows.

The yen has slumped more than 30 per­cent against the green­back since Prime Min­is­ter Shinzo Abe came to power with plans to kick­start the econ­omy through quan­ti­ta­tive eas­ing. BOJ Gover­nor Haruhiko Kuroda last month ruled out any im­me­di­ate ex­pan­sion in the cen­tral bank's mon­e­tary stim­u­lus as he ex­pressed con­fi­dence that in­fla­tion will reach its tar­get by Septem­ber 2016.

"Though Ja­pan's econ­omy is highly ex­posed to China, the al­ready very weak lev­els of the yen -- it is down more than 30 per­cent in real, trade-weighted terms since 2010 -- is al­low­ing the cur­rency to strengthen while other re­gional cur­ren­cies like the Korean won fall on the back of the weaker yuan out­look," Man­soor Mohi-ud­din, se­nior mar­kets strate­gist in Asia at Royal Bank of Scot­land Group, said in an in­ter­view.

Since the end of 2010, the yuan has strength­ened against the dol­lar, while the cur­ren­cies of South Korea, Philip­pines, Sin­ga­pore, Tai­wan and Thai­land, Malaysia and In­dia have weak­ened less than the yen.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.