By Candice Zachariahs and Ron Harui - Jan 31, 2011 7:08 AM GMT+0800
The dollar, yen and Swiss franc advanced for a second day against the euro on concern Egypt’s political turmoil will destabilize the Middle East, spurring demand for safer assets.
The greenback and yen also gained versus higher-yielding currencies such as the Australian and New Zealand dollars after Egyptian President Hosni Mubarak yesterday met with top military commanders as tens of thousands of protesters defied a curfew and gathered in central Cairo. The yen touched a one-week high against the euro as unrest in Egypt fueled concern that Asian stocks will extend a global equity slump.
“The concerns are that we’re going to see contagion from Egypt to other parts of the Middle East,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “As long as these concerns about Egyptian political tensions persist, flight-to-safety flows are likely to favor the dollar, yen and Swiss franc.”
The dollar rose to $1.3581 per euro at 8:01 a.m. in Tokyo from $1.3611 in New York last week. The yen gained to 111.58 per euro from 111.77 after earlier touching 111.28, the most since Jan. 20. The Swiss franc advanced to 1.2794 per euro from 1.2821 after rising 1.3 percent against Europe’s common currency on Jan. 28. The greenback was at 82.16 yen from 82.12.
Egypt’s banks and markets stayed shut yesterday after six days of clashes in the most populous Arab country that left as many as 150 people dead. Markets throughout the Middle East declined yesterday on concern the unrest may spread.
The yen also strengthened as futures signaled most regional stock markets will slide after the Standard & Poor’s 500 Index decreased 1.8 percent on Jan. 28.
“The volatile political situation in Egypt has triggered a bout of investor risk aversion with traders buying the ‘safe haven’ yen, franc and dollar,” analysts including John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd., wrote in a research note today.