Yen surges on Iraq concerns

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IOL world currency1 Graphic: Renjith Krishnan.

Tokyo - The yen soared in Asia Friday as US President Barack Obama's announcement that he had authorised US air strikes on Iraq pushed traders into the Japanese currency.

The dollar dropped to as low as 101.58 yen before recovering to 101.78 yen, but still well down from 102.09 yen in New York late Thursday as geopolitical tensions weighed on the unit.

The euro also fell to 135.93 yen from 136.42 yen, while it was also down at $1.3347 (R14) against $1.3363.

The yen is seen as a safe-haven currency which investors tend to buy in times of uncertainty and turmoil.

The unit's sharp rise came after Obama said he had authorised the air strikes on Iraq and humanitarian supply drops to prevent a “genocide” by Islamist extremists against minorities.

But Obama, who was an outspoken critic of his predecessor George W. Bush's 2003 invasion of Iraq, said he was not sending back ground forces.

“Players tend to buy the safe-haven yen in times of uncertainty and the market followed that trend today,” said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.

Currency markets largely ignored the Bank of Japan's decision on Friday to hold off expanding its vast stimulus programme following a two-day policy meeting, despite warning that the country's export and factory output picture was weakening.

The decision was widely expected and investors would now turn their focus to a regular post-meeting press briefing from BoJ governor Haruhiko Kuroda.

Investors were also keeping an eye on the Ukraine crisis.

On Thursday, NATO chief Anders Fogh Rasmussen urged Russia to “step back from the brink” during a visit to Kiev and vowed support for Ukraine as fears mounted that Moscow was preparing to send troops into the conflict-torn east of the country.

His comments came as Russia retaliated against tough new Western sanctions, banning most food imports from the United States and the European Union and threatening to block flights over its airspace.

The tit-for-tat moves further heighten tensions between Russia and the West over the conflict in Ukraine. - Sapa-AFP


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