TOKYO: The dollar slipped to a 16-month low against the Japanese yen on Monday, pressured by lingering fears of a global trade war and caution towards political developments in Tokyo.
The U.S. currency traded at 104.835 yen JPY= after falling to 104.560, its weakest since November 2016.
Global markets were shaken after U.S. President Donald Trump moved to impose tariffs on Chinese goods, edging the world’s two largest economies closer to a trade war.
Views that Japan’s political scandal could deepen was also seen lifting the yen, with a key figure in a cronyism scandal gripping Prime Minister Shinzo Abe due to testify in parliament on Tuesday.
Economic measures dubbed “Abenomics” initiated by Abe has been a factor that has pulled the yen down over the past few years to the benefit of exporters. Any event that leads to a decline in the premier’s support ratings is seen weakening his ability to keep Abenomics in place.
“With worries about the United States and China locking horns on trade issues and Japan’s parliamentary testimony coming up on Tuesday, few participants are willing to buy the dollar,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“It really is typical ‘risk off’ trades dominating right now, with the yen and Swiss franc the big beneficiaries. But more speculators are jumping in, and any reversals could be sudden and violent.”
The Swiss franc was little changed at 0.9467 franc per dollar CHF= after gaining 0.55 percent against the greenback last week.
The euro edged higher at $1.2364 EUR= after rising 0.5 percent last week.
The Australian dollar added 0.3 percent to $0.7714 AUD=D4 and the New Zealand dollar NZD=D4 gained 0.35 percent to $0.7250. —Reuters