The Japanese Yen drops as the safe-haven demand subsides

The Japanese Yen traded at 111.27 per dollar in Asia on Thursday. It dropped to its lowest record since May 2019. Moreover, the currency fell by 1.3% on Wednesday before trading near a nine-month low against the U.S. dollar.

China’s aggressive steps to offset the economic impact of the coronavirus epidemy caused such a downfall. While the Chinese Yuan strengthened against the dollar in offshore trade, Yen struggled.

The Japanese currency rallied during the last several weeks due to the investors’ risk-off tactics. Additionally, they moved from the Chinese Yuan to Yen and the U.S. dollar. The dollar maintains its high so far, mostly thanks to the good new data about the U.S. economy.

However, as the number of virus’ new cases started to slow in China, traders’ demand for Yen weakened, causing it to lower. Furthermore, Chinese officials announced that they are ready to take more drastic measures to aid the companies hit by the virus. This statement also reduced demand for safe-haven investments.

Yukio Ishizuki, the foreign exchange strategist at Daiwa Securities in Tokyo, noted that the Yen fell so suddenly, that it could bounce back slightly in the very short term. Even so, the sentiment is leaning away from risk-off as China is willing to pull out all the stops to support its economy.

Thus far, the Yuan traded at 7.0100 per dollar as traders awaited additional stimulus from Chinese officials. They expect that the People’s Bank of China will cut its benchmark rate on Thursday.

What about the Euro and the Sterling?

The Euro traded at $1.0810, close to its lowest level since April 2017. Though it managed to stabilize in Asian trading, the Euro remains weak after disappointing economic data caused it to plummet down.

The Sterling also fell by 0.6% on Wednesday, as Britain and the European Union are still in limbo about the trade deal. The Swiss franc, another safe-haven currency, was quoted at 0.9841 against the dollar, close to its weakest point since December.