Yen Continues Fall as Demand For Yield Rises

The Japanese currency had a day of losses against major currencies and higher-yielding assets as the global slump eases, improving investor’s confidence to take riskier positions.

The yen has been suffering multiple sessions of losses since the global recession gave its first signs of ending in the beginning of April, and being regarded by traders as a safe refuge for times of uncertainty and crisis, the Japanese currency lost most of the gains it posted during the worst moments of the crisis, in the last semester of the past year. The pound climbed significantly against the yen as the political crisis in the United Kingdom seems rather controlled. Australia’s dollar climbed versus the yen as an industry report showed an increase in the consumer confidence.

Currency specialists affirm that refuge currencies like the Japanese and the North American may enter an important downtrend, as risk aversion is declining, favoring emergent market currencies like the South Korean won, and commodity-linked currencies like the Australian. It is very likely that a weaken yen will follow for the next months, according to specialists, even if the Japanese economy shows relevant signs of recovery, it won’t probably be able to sustain the yen at high levels, since the outflow of investors towards higher-yielding positions abroad will tend to be much larger.