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Safe-haven currencies gain amid tensions in Eastern Europe

posted onFebruary 18, 2022

The Japanese yen weakened past 115 per dollar on Friday (Feb. 18) following news that Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Antony Blinken have agreed to meet in Europe next week for talks over the crisis in Ukraine.

The safe haven currency hit a 2-week high of 114.79 earlier in the session. Meanwhile, the Swiss franc also commonly seen as a safe-haven asset, strengthened to a 2-week high of 0.92 per USD, after hovering at the 0.925 level in the first half of February,  as investors sought safety amid geopolitical tensions.

The Japanese yen and the Swiss franc have gained this week as the ongoing standoff in Ukraine continues to weigh on investors’ minds. 

“The back and forth of the Ukraine crisis continues to dominate FX markets, but investors have progressively become more prudent after the optimism that prevailed earlier this week amid initial signs of a de-escalation. The net result in FX is to further lock currency majors within tight trading ranges,” UniCredit analysts wrote in a note sent to clients.

Meanwhile, Japan’s core inflation rate, which excludes fresh food but includes fuel costs, slowed to 0.2% in January  from a 0.5% rise in the preceding month, falling short of expectations and remaining well below the central bank's 2% target.

In Tokyo's stock market, the Nikkei 225 lost 0.41% to close at 27,122.07 while the Topix index fell 0.36% to 1,924.31. 

Gold,  consolidated around the $1,890 mark on Friday but the recent rally set the precious metal up for a third straight weekly gain as the Ukraine crisis gave bullion bulls extra momentum.

“The need for safety among market participants still appears considerable against the backdrop of the Ukraine crisis, meaning that gold remains in demand as a safe haven,” Commerzbank analysts said in a note. 

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