TOKYO: The yen began the week at the top of its recent range on Monday as global markets were on edge after Crimean citizens voted to be annexed by Russia, prompting risk-wary investors to seek traditional safe-haven bets.
Over 90 percent of Crimean voters chose to break with Ukraine and join Russia on Sunday, an outcome that was denounced by Western powers and leaders in Kiev as a sham.
US President Barack Obama said Washington rejected the results of the referendum and warned that the United States stood ready to impose sanctions on Moscow.
A record drop in US Treasuries holdings by foreign governments with the Federal Reserve led some to speculate that Russia has been reducing its dollar reserves ahead of possible sanctions from the West.
Asian investors were also considering the implications of Beijing's announcement on Saturday that it will double the daily trading range for its yuan.
"The majority view seems to be that this will be negative for CNY because the Chinese economy now needs the depreciation," Steven Englander, global head of G10 FX strategy at CitiFX said in a note to clients.
The move is largely seen as US dollar-positive, but Englander believes China was unlikely to allow big moves within the wider band just yet.
"Chinese policymakers will not want the widening to be accompanied by a sharp move to the weak CNY side of the band. They will want the move to be seen as confidence that they have economic and financial conditions under control," he said.
The dollar was steady on the day at 101.31 yen, while the common currency edged down to 140.97 yen.
Against the greenback, the euro slipped slightly to $1.3908 , but still not far from a 2-1/2-year high around $1.3967 touched on Thursday before European Central Bank President Mario Draghi knocked it lower when he voiced concerns about its strength.
The latest data from the Commodity Futures Trading Commission released on Friday showed that speculators pared bullish bets on the US dollar for a fifth straight week through March 11, with net longs falling to their lowest in more than four months. Overall, though, investors have maintained net long positions on the dollar for 19 consecutive weeks.
The last time speculators were short the greenback was in late October 2013.
Short yen positions rose to a two-month high, said Marc Chandler, chief global currency strategist at Brown Brothers Harriman.
"The yen strengthened after the reporting period and while some talked about it as safe haven buying, we suspect it was more about short-covering," Chandler said in a research note.
Comments
Comments are closed for this article.