Oct. 20 (Bloomberg) -- The yen is a better bet than the dollar or Swiss franc in times of market turmoil, according to Bank of Tokyo-Mitsubishi UFJ.
The yen topped the bank’s haven list, followed by the franc, the U.S. dollar and the Canadian dollar. New Zealand’s currency had the fewest refuge characteristics, the bank said.
“Historically, the yen has the strongest positive correlation with rising risk aversion, while the Japanese economy is surprisingly closed, leaving it less exposed to swings in external demand,” said Lee Hardman, a strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. in a note to clients today. “Japan has the third largest asset market after the U.S. and euro-zone, with ample liquidity, an attractive proposition during periods of heightened financial market instability.”
The Tokyo-based bank ranked the currencies of the Group-of- 10 nations on the liquidity of the domestic financial market, the quality of its domestic government balance, domestic economic and political stability and the domestic economy’s and currency’s resilience to external shocks, according to the report.
The yen can gain support as Japanese investors repatriate funds and from the nation’s international investment surplus equaling about 55 percent of gross domestic product.
The yen fell 0.1 percent today to 76.89 per dollar and gained 0.1 percent to 105.57 per euro in New York.
--Editors: Paul Cox, Greg Storey
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