Asia

Yen, dollar ascendant as Delta variant spurs flight to safety


Safe-harbour currencies like the Japanese yen and U.S. dollar held near multi-month highs against the riskier Australian dollar and British pound on Tuesday, as fears grow that a rampant coronavirus variant could upend the global economic recovery.

FILE PHOTO: Illustration photo of U.S. dollar and Japan yen notes

FILE PHOTO: A U.S. hundred dollar bill and Japanese 10,000 yen notes are seen in this photo illustration in Tokyo, February 28, 2013. REUTERS/Shohei Miyano/File Photo

TOKYO: Safe-harbour currencies like the Japanese yen and U.S. dollar held near multi-month highs against the riskier Australian dollar and British pound on Tuesday, as fears grow that a rampant coronavirus variant could upend the global economic recovery.

The yen surged to 80.05 per Aussie dollar on Monday for the first time since early February, before trading at 80.40 early Tuesday. It also rallied to an almost three-month top of 149.35 to the pound overnight, and last changed hands at 149.73.

The dollar strengthened to an almost eight-month high of US$0.73225 per Aussie to start the trading week, and hit the highest since early February at US$1.3655 to sterling. It last stood at US$0.73390 per Aussie and US$1.36685 versus the pound.

The yen outpaced the dollar, rising to 109.07 per greenback on Monday for the first time since late May, helped by a precipitous slide in benchmark U.S. Treasury yields to as low as 1.1740per cent for the first time since mid-February. On Tuesday, one buck bought 109.555 yen.

The euro underperformed the dollar, dipping overnight to the lowest since early April at US$1.1764 before last trading at US$1.17965.

The fast-spreading Delta variant of COVID-19 is now the dominant strain worldwide, and has been accompanied by a surge in infections around the United States, particularly in areas where vaccinations have lagged.

Meanwhile, Boris Johnson’s ‘freedom day’ – ending over a year of COVID-19 lockdown restrictions in England – was marred by surging infections and the prime minister’s own forced self-isolation after Health Minister Sajid Javid tested positive for the virus.

In Australia, nearly half of the 25 million population is living under lockdowns to quell an outbreak of the Delta variant.

“What is likely concerning markets now is … a surge in infections occurring in developed markets with high levels of vaccination,” National Australia Bank analyst Tapas Strickland wrote in a client note.

“That suggests virus restrictions may need to be in place for longer,” delaying the global recovery, he said.

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)



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