TOKYO: The pound rallied against major currencies yesterday as Scotland rejected independence from the United Kingdom, while the dollar closed in on the 110 yen level for the first time in more than six years.
Sterling jumped to a two-year euro high in morning Asian trade with early results indicating a win for the Scottish “No” camp, while it also tacked on gains against the dollar and yen as recent fears about the UK economy subsided.
The euro tumbled to 0.7810 pounds in Tokyo, its lowest level since July 2012, while sterling rallied to $1.6525 and a six-year high of 180.71 yen. “Scotland has voted against independence overnight in a move that has removed a great weight from the shoulders of sterling,” said economist Simon Smith at trading group FxPro.
However, despite confirmation of the “No” win, later in the day the euro stood at £0.7840, while the pound pulled back to $1.6450 and 179.42 yen.
The news also helped the dollar, which changed hands at 109.14 yen in Tokyo afternoon trade, up from 108.68 yen in New York and breaching the 109 yen mark for the first time since August 2008.
The greenback is riding high after the Federal Reserve suggested interest rates could rise more than initially forecast when they are eventually hiked, possibly from mid-2015.
A disappointing night for Scotland’s “Yes” camp sparked buy-backs of the pound, while investors dumped the yen, which is seen as a safe-haven currency in times of turmoil or uncertainty.
“The brisk performance of Asian stocks and the ‘No’ side’s dominant position triggered strengthening in risk-taking sentiment,” said Osao Iizuka, head of spot forex trading at Sumitomo Mitsui Trust Bank.
Strong market sentiment could push the dollar to 110 yen, said Shigetake Nakayama, senior manager of the foreign exchange trading department at the Bank of Tokyo Mitsubishi UFJ.
The dollar spent much of the year in a 101-104 yen range with its recent surge also driven by the increasing divergence between tightening US monetary policy and expectations for further easing by the Bank of Japan and European Central Bank.
But Charlie Chan, head of macro hedge fund Splendid Asia in Singapore, told Dow Jones Newswires: “I don’t think it goes beyond 110 — it’s moved quite a long way (already).” In other trading, the euro briefly soared to 141.22 yen, its highest since May and up from 140.43 yen in New York, while it slipped to $1.2902 from $1.2921.
AFP
