Japanese Yen to US Dollar (JPY/USD) Exchange Rate climbs to two-month high as geopolitical tensions rise

The Japanese Yen made gains against the US Dollar and Pound Sterling on Monday as investors were spooked by growing tensions between China and Vietnam and as a UN official said that the Ukraine crisis is edging towards a point of no return.

Against the US Dollar the Yen was able to take advantage of last week’s disappointing US data which showed that consumer confidence in the world’s largest economy fell. The report overshadowed data which showed that housing starts in the US increased by 13.2% last month.

Investors turned to safe havens as concerns mounted over a deteriorating situation between China and Vietnam. A wave of rioting has led to dozens of Chinese workers in Vietnam being wounded and two have been killed.

In response the Chinese government has dispatched five ships to Vietnam in an effort to evacuate its citizens. The Vietnamese government has called on the riots to end but a number of dissident groups incited further anti-China protests in several cities.

The tension between the two Asian countries has been caused by China’s decision to move an oil rig into contested waters in the South China Sea. The act led to clashes between Vietnamese and Chinese ships in the area.

Concerns over Ukraine also bolstered demand for safe havens after the UN assistant secretary general for human rights said that the crisis has worrying echoes of the 1990’s war in Croatia. He added that the chances of stopping a full-scale civil war are fading as Ukrainian government forces continued to battle pro-Russian Separatists in the east of the country.

“Demand for US Treasuries will continue to be supported by risk aversion, limiting the upside in Dollar-Yen. There is uncertainty surrounding presidential elections in Ukraine and rising tensions between China and Vietnam. It’s not an environment where investors want to aggressively take risks,” said a senior analyst at Tokyo based Ueda Harlow Ltd.

With a lack of market-moving data releases today we can expect the Yen to hold onto its gains.

Japanese Yen (JPY) Exchange Rates

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,,Japanese Yen,101.3700 ,
Euro,,Japanese Yen,139.0330 ,
Pound Sterling,,Japanese Yen,170.5350 ,
Australian Dollar,,Japanese Yen,94.8215 ,
[/table]