TOKYO: – The yen firmed against the dollar and the euro in Asian trade Monday as sliding oil prices provoked growth concerns.
The haemorrhaging price of a barrel of oil — down 47 percent since the June peak to below $57 for West Texas Intermediate — dragged US stocks to one of their worst losses of the year Friday.
That completed a global rout of equity markets where players fear the sharp drop in crude could do more harm to many economies than it does to help consumers.
The yen, seen as a secure investment target in time of economic uncertainty, was up slightly against the dollar, trading 118.40 yen in morning trade in Tokyo, against 118.78 yen in New York late Friday.
The euro fetched $1.2460, little changed from 1.2464 in New York, while the common currency slipped to 147.48 yen from 148.05 yen.
The yen was also being supported by Sunday’s election victory for Prime Minister Shinzo Abe which is taken as an endorsement of his economic programme, analysts said.
Tokyo’s Nikkei index opened down 1.50 percent on the firmer yen.
However, Abe’s win was expected and had been largely factored in, so the market focus was quickly shifting to the US Federal Reserve’s policy meeting this week, with expected good news for the dollar.
The Fed could give a clearer indication of a rate hike in mid-2015. “US economic indicators have been good since the jobs data,” so the dollar-yen “will likely continue on a rising trend,” said Osao Iizuka, head of foreign-exchange trading at Sumitomo Mitsui Trust Bank.
Junichi Ishikawa, market analyst at IG Securities, agreed, saying that investors need to stay cautions about higher yen.
Investors barely reacted to the Bank of Japan’s quarterly Tankan survey that showed confidence among major Japanese manufacturers edged down in the three months to December.
— Dow Jones Newswires contributed to this story –