Yen slips as Turkish military coup is foiled

LONDON – The yen sank back towards three-week lows against the dollar yesterday as investors unwound a surge of safehaven trades done on the back of reports of an attempted military coup in Turkey on Friday.

Turkey widened a crackdown on suspected supporters of the failed coup on Sunday, taking the number of people rounded up in the armed forces and judiciary to 6 000 and the government said it was in control of the country and economy.

That eased concerns over the prospect of another major round of turmoil to add to Europe’s economic and political problems, drawing investors back into higher-risk currencies and out of the traditional security of the yen.

“The scenario looks a bit calmer now … so we’re back to thinking about the sort of policy outlook that had the yen falling against the dollar last week,” said Jeremy Stretch, head of currency strategy at CIBC in London.

Intense discussion in the past week around the prospect of the Bank of Japan directly funding a rise in government spending as “helicopter money” has weakened the yen against other major currencies.

Some dealers, without citing actual knowledge of flows, said last week’s gains for sterling against the yen might also have been inflated by flows related to Softbank’s R465-billion purchase of Britain’s ARM Holdings.

The pound has gained 9% against the yen in the past eight days, while the dollar rose just under 5%.

But the broader world environment is dominated by moves by central banks towards more stimulus of the economy after a series of political blows to investment and failure of several rounds of money-printing to get growth going again. –