Yen Declines as Geopolitical Tensions Ease in Ukraine and Gaza

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Yen Declines as Geopolitical Tensions Ease in Ukraine and GazaThe yen plunged against most counterparts as geopolitical tensions in Ukraine dissipated; with Russia announcing that its aircraft had halted drills near Ukraine border, while Foreign Minister Sergei Lavrov termed a ceasefire in Ukraine a likely possibility. Israel and Gaza warring factions also agreed to a 72-hour ceasefire in a deal brokered by Egypt.

The yen declined 0.1 percent to trade at 102.11 per dollar at 7:22 a.m. in London after earlier touching 101.51 on August 8, its highest level since July 24. The Japan’s currency traded at 135.80 against the euro from the previous level of 136.83. The euro fell 0.1 percent to $1.3397.

“The headline that Russia is looking to deescalate the Ukrainian situation has seen a bit of stability return to the market,” Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd, told Bloomberg News. “We’re reversing some of the flight to safety.”

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The yen also dropped after Japan’s Health Ministry announced that the Government Pension Investment Fund, which is valued at 126.6 trillion yen ($1.2 trillion), has flexibility in terms of deviation limits on invested assets. Eliminating such limits would pave the way for the GPIF to invest more in local shares before its change its goal for the asset class ahead of an impending review. The fund, which has currently invested 12 percent of its portfolio in local stocks, wants to increase this to 20 percent.

Elsewhere in Asia, the Indonesia’s rupiah rallied after a local court questioned the evidence submitted by presidential election loser Prabowo Subianto who wants the election of incumbent president Joko Widodo nullified. The rupiah rose 0.9 percent to trade at 11,664 per dollar, the most since July 7. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

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