Yen, Swiss franc rise as investors seek safe havens

Singapore

THE Japanese yen and the Swiss franc gained on Monday, thanks to safe-haven buying as sentiment in financial markets remained fragile on heightened worries over political instability in the United States and fears of a global economic slowdown.

Trading volumes were thinning out with most global markets set to shut for Christmas, while Japan was closed on Monday for a holiday.

There was hardly any appetite among investors to take on risk, with a deteriorating outlook for global growth leaving stocks hurtling down for their worst quarterly performance since 2008.

That has attracted bids for the likes of the yen and Swiss franc, considered a safe-bet during times of economic and political stress. They were up about 0.1 per cent each on the dollar in Asian trade.

"The global equity market rout has been driving sentiment in the currency markets. I don't see any significant rebound in risk sentiment yet," said Stephen Innes, head of Asia trading, Oanda.

The dollar index, a gauge of its value versus six major peers, lost 0.2 per cent to 96.76.

In a widely expected move, the US Federal Reserve raised interest rates by 25 basis points last week for its fourth hike of the year, underpinned by a relatively robust US economy compared with its peers elsewhere.

However, with the Fed signalling "some further gradual" rate hikes despite global risks, traders are growing increasingly nervous that higher borrowing costs would hurt corporate profits and put the brakes on the world's biggest economy.

Falling US bond yields, particularly in the last several weeks, have further inflamed concerns over US economic prospects and dragged on the dollar.

In recent months US President Donald Trump has expressed his displeasure over rising US rates, arguing that the Fed's monetary tightening threatens to derail the economy.

The partial US government shutdown which could continue to Jan 3, when the new Congress convenes and Democrats take over the House of Representatives, has also contributed to the souring of risk sentiment.

The yen gained 0.2 per cent, changing hands at 111.03. The heightened fears over slowing global growth benefited the Japanese currency the most last week; it rose 2 per cent on the US dollar, and against the Australian dollar, the yen put on a sizable 4 per cent.

The euro was up 0.2 per cent and last fetched 1.1389 on the dollar. REUTERS