Yen recovers as fears of banking crisis contagion grow

The safe-haven yen rebounded after early sharp declines and the risk-sensitive Australian and New Zealand dollars turned a loss as early optimism about global authorities’ efforts to contain a banking crisis ebbed.

According to “Reuters”, the Japanese currency, which is particularly sensitive to long-term Treasury yields, recovered from sharp losses of 0.6 percent to settle against the dollar after the US bond yield for ten years fell sharply with the approaching start of trading in Europe after Its rise was 12 basis points earlier

The Australian dollar, which earlier rose 0.7% to a nearly two-week high of $0.6743, fell 0.2% to $0.6683 in latest trading. The New Zealand dollar fell 0.3 percent at $0.6250, giving up previous gains of 0.7 percent.

“The driving force of the market is risk aversion,” said Takahiro Sekido, chief strategist for Japan at MUFG.

He added, “I am not very pessimistic, but we still have to wait and see to what extent we will witness the contagion of risks from Europe … At least for this week, I expect the yen to remain strong.”

Moreover, the Japanese currency reached 131.79 per dollar in its latest trading, while maintaining gains of 2.5 percent from last week.

Euro was stable at 1.0671 dollars, and the pound sterling did not change much at 1.2189 dollars, which led to erasing the simple gains it had previously recorded.

US dollar index, which measures the currency against six major currencies, including the yen and the euro, settled at 103.80, after declining 0.7 percent last week.

In the cryptocurrency market, the bitcoin currency took a break after rising to a nine-month high of $28,474 on Sunday, and recorded a decrease in its latest trading by 1.5 percent, at about $27,629.