Emerging Markets Less Attractive, Yen Rises

Japanese yenThe Japanese yen rose today against the U.S. dollar and recovered the gap-losses against the euro and the pound after the Russia’s central bank devalued the national currency again, reducing the attractiveness of the emerging markets.

After two days of decline against the major currencies, the yen is currently posting a daily growth even after the strong negative weekly opening gap. When the investors and the traders become more risk-aware they tend to move out of the high-yielding currencies and buy the Japanese currency or the other yen-denominated assets.

The Bank of Russia expanded the ruble’s trading band against the bi-currency basket that consists of 55 percent U.S. dollars and 45 percent euros. That was 6th devaluation made by the country’s central bank since the start of the year.

Analysts believe that each devaluation signal received from the influential emerging markets, such as Brazil, Russia, India or China (the so called BRIC), will press on the overall condition of the high-risk assets. The yen has a great potential as the reserve and safe haven currency, while the bearish sentiments are support by the central banks of the emerging economies.

USD/JPY fell from 90.97 to 90.52 as of 8:43 GMT today. EUR/JPY declined from 121.44 to 120.27; GBP/JPY went down from 135.24 to 133.15 today.