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Yen picks up in Asia as oil price drops

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Tokyo / AFP

The yen picked up on Tuesday as another fall in oil prices dented sentiment, while the pound was under pressure over worries that Britain may vote to leave the European Union this year.
Traders pushed into the Japanese unit — widely seen as a safe investment in times of turmoil — after another drop in crude prices, which surged more than six percent in the US on Monday.
But on Tuesday, US crude and Brent were down more than one percent each, as traders weighed discussions on an output freeze by key producers in an oversupplied global market.
In response to the uncertainty, the dollar weakened to 112.28 yen in Tokyo from 112.91 yen Monday in New York.
The euro dropped to 124.02 yen from 124.52 yen, while the common currency edged up to $1.1043 from $1.1029 in US trade.
The pound bought $1.4114, after falling to $1.4058 in US trading, its lowest level since March 2009. It later recovered to $1.4148 in New York deals.
British Prime Minister David Cameron’s deal with the EU last week to avoid an exit from the bloc was quickly thrown into question after London Mayor Boris Johnson declared Sunday his support for the leave campaign in the June 23 referendum.
The yen’s ascent was also being propelled by growing doubts over Tokyo’s bid to jumpstart an economy that contracted 0.4 percent in the October-December quarter.
Analysts warned that the Bank of Japan may be running out of policy tools after it announced a negative interest rate policy last month — a move widely seen as a desperate effort to kickstart growth.
More easing measures would tend to weaken the yen.
“It’s beginning to feel like the BoJ is completely stuck,” Tetsuo Seshimo, a portfolio manager at Saison Asset Management, told Bloomberg News.
“The yen had been trading at historically low levels that implied an endless amount of easing, but now doubts are emerging.
“It’s difficult to imagine any scenarios where the BoJ can take action.”
In other trading, the yuan fell after the People’s Bank of China lowered its daily reference rate by the most in six weeks, while emerging currencies broadly gained on the dollar.
The Malaysian ringgit ticked up 0.19 percent and South Korea’s won climbed 0.16 percent. Indonesia’s
rupiah and the Thai baht also rose.

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