TOKYO, Jan 11 — The yen surged to its strongest since August as a rout in assets linked to Chinese economic growth prompted hedge funds and other large speculators to turn bullish on the haven currency for the first time since before Shinzo Abe came to power in 2012.
Japan’s currency has surged 3 per cent so far this year, the biggest gain among 31 major peers, as an eight-day run of reductions to the yuan’s reference rate through Thursday sent shock waves through financial markets.
The dollar on Friday completed its biggest weekly drop versus the yen since August 2013 as traders pared bets on a March interest-rate increase by the Federal Reserve, ignoring data that showed employers added more jobs than economists had forecast in December.
“Risk appetite is pretty weak at the moment with what’s going on in China and falling equity markets,” said Jason Wong, a currency strategist at Bank of New Zealand Ltd. in Wellington.
“This is going to be a really choppy year and that sort of environment is going to be supportive for the yen.”
The yen rose 0.4 per cent to 116.79 per dollar as of 6:52 a.m. in Singapore after touching 116.70, the strongest level since Aug. 24. Japanese markets are closed for a public holiday Monday. South Africa’s rand plunged as much as 8.9 per cent.
Positions that profit from yen gains against the dollar outnumbered bearish positions by a net 4,103 contracts in the week to January 5, according to data from the US Commodity Futures Trading Commission.
That’s the first time since October 2012 the data haven’t shown net short positions.
Abe was elected prime minister in December 2012 having called for unprecedented monetary easing to end decades of deflation in the world’s third-largest economy. — Reuters
