TOKYO: The yen rallied in Asia Thursday as traders fled higher-risk assets, pushing down emerging currencies as a rout that has swept global markets at the start of the year resumed.
Regional equities plunged as jittery investors reacted to a slump on Wall Street as oil saw another drop and the Federal Reserve released a lukewarm report on the US economy.
Global markets have been in freefall since the beginning of the year, largely on the back of worries about a growth slowdown in China -- a key driver of the world economy.
Plunging oil rates overshadowed a better-than-forecast Chinese trade report Wednesday, which provided some rare good news about the Asian economic giant.
Crude prices, which have plummeted about 70 percent in 18 months -- continue to tumble, with news that US stockpiles had risen last week adding to the sense of gloom. The Brent contract on Wednesday fell below $30, a day after the US benchmark West Texas Intermediate (WTI) did the same.
The Fed's closely watched Beige Book report pointed to more sluggish US economic growth, throwing cold water on the likelihood its policy board will add to December's interest rate hike when it next meets later this month.
In Tokyo, the dollar weakened to 117.56 yen, from 117.72 yen in New York, while the euro was also lower at 127.87 yen against 128.00 yen. The euro edged up to $1.0883 from $1.0874.
The yen is widely seen as a safe asset in times of uncertainty and turmoil.
"There is a trend of yen buying amid falls in global stock markets," Masafumi Yamamoto, chief forex strategist at Mizuho Securities, told Bloomberg News.
But the dollar picked up against emerging market currencies, with the South Korean won down 0.6 percent and the oil-reliant Malaysian ringgit weakening 0.4 percent.
The Australian dollar was 0.2 percent lower but supported by a better-than-expected jobs report.
Indonesia's rupiah shed 0.9 percent after reports emerged of a huge blast in Jakarta that had killed at least three people.
"We're in a perfect storm," said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York.
"Even though we knew a lot of these factors in the past, they all seemed to come together at the start of 2016 to take a bite out of people.
Comments
Comments are closed for this article.