The Japanese Yen climbed to its highest level in five-weeks against the Euro and edged upwards against the British Pound and US Dollar. The rise comes after the world’s second largest economy, China, started to show signs of a slowdown.
The data out of China spurred investors to take a risk off approach and opt for safer currencies such as the Yen and US Dollar.
“Signs of a slowdown in China tend to turn markets to a risk-off mode and spur yen-buying in the short term,” said Minori Uchida, head of global market research at the Bank of Tokyo-Mitsubishi UFJ Ltd. “Stock prices are supported by monetary easing, so tapering would drive down equities.”
China’s preliminary reading of its Purchasing Managers Index for manufacturing fell to 49.6 in May, a worse figure than the 50.4 figure recorded in April. A reading below 50 indicates contraction.
Adding to the Yen’s rise was the testimony of Federal Reserve Chairman Ben Bernanke. The Fed chairman expressed concern that government budget cuts are having a negative impact on the US economy and showed little willingness to halt its record stimulus programme.
“What we are looking for is increased confidence that the labour market is improving and that that improvement is sustainable,” Bernanke told lawmakers yesterday. “And as we see that, we will in steps respond to that by reducing the amount of accommodation in a way that’s appropriate.”
As a result of the China data the Australian Dollar fell to an eleven- month low against the US Dollar, the New Zealand Dollar meanwhile declined to an eight-month low.
Current Japanese Yen (JPY) Exchange Rates:
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 101.8147
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 153.2583
The Euro/Japanese Yen Exchange Rate is currently in the region of: 131.0057
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 81.7659
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 98.0577