Yen Declines but Remains Resilient Despite the Ukraine-Russia Conflict

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Yen Declines but Remains Resilient Despite the Ukraine-Russia ConflictThe yen declined against the euro and dollar on Monday on fears of sanctions by Western nations on Russia after Crimea backed the union with Soviet nation.

The Sunday referendum saw about 97 percent of Crimean voters choose to join Russia, a result that was termed by leaders in Kiev and Western nations as a sham. U.S. President Barack Obama said his country will not recognize the results, and will impose sanctions on Russia.

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The euro and the dollar both hit their day highs, after the 00100 GMT fixing in Tokyo, with importers in Japan thought to be some of the biggest buyers. Most market participants attributed the yen’s stability to short-covering instead of the usual safe-haven moves.

“Investment managers continue to hold a very short-yen position, so I think there could possibly be some position adjustments going on,” said Bart Wakabayashi, the Tokyo-based head of forex at State Street.

“Obviously, when there’s risk, there’s an element of safe-haven flow, but I think there are adjustments going on as well,” he added.

Recently, holdings of U.S. Treasuries by foreign governments plunged sharply, leading some analysts to speculate that Russia was scaling back its dollar reserves due to potential sanctions from Western nations.

The dollar closed the day up 0.2 percent at 101.52 yen, which neared its session peak of 101.57 yen, which was less than a one-and-half month peak of 103.77 yen that it hit on March 7.

The euro was last up 0.1 percent at 141.16 yen; down from its day’s high of 141.27 yen, which was also less than its May 7 peak of 143.79 yen.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com