A gauge of the yen climbed to a five-week high as investors sought a haven after crude oil slumped and Russia raised interest rates.

Australia’s dollar touched the lowest level in more than four years against the greenback after the Reserve Bank said the currency needed to weaken to achieve balanced growth. The Indonesian rupiah slid for a fifth day to the weakest since November 2008. Russia’s ruble slumped to a record yesterday. The U.S. dollar weakened before the Federal Reserve starts a two-day policy meeting.

“The yen is being bought in a risk-off trade,” said Yujiro Goto, a currency strategist at Nomura Holdings Inc. in London. “It’s uncertain how far this oil rout will go so the correction could continue for some time yet.”

An Bloomberg index comparing the yen against 10 developed-nation currencies advanced 0.2 percent to 302.2834 at 1:07 p.m. in Tokyo after rising to 302.5257, the highest since Nov. 11.

The yen gained 0.4 percent to 117.40 per dollar after strengthening 0.8 percent in New York. Japan’s currency added 0.2 percent to 146.29 per euro from yesterday, when it advanced 1 percent. The dollar slid 0.2 percent to $1.2458 per euro.

Crude slid as much as 4.8 percent to $55.02 a barrel yesterday, the least since May 2009, after the United Arab Emirates said the Organization of Petroleum Exporting Countries won’t cut production even if prices fall as low as $40 a barrel.

Russia Rates

Russian central bank unexpectedly raised its key interest rate to 17 percent from 10.5 percent. The increase was the largest since 1998, when Russian rates soared past 100 percent and the government defaulted on debt.

The decision came after the ruble weakened past 60 per dollar yesterday for the first time, sliding 9.3 percent to 64.2372 per dollar. The economy is set to shrink 0.8 percent in 2015, the government said this month.

“The collapse of the ruble has intensified amid falling oil prices,” Bernd Berg, an emerging-market strategist at Societe Generale SA in London, wrote in an e-mail. “Russia is facing the risk of a currency and confidence crisis.”

A gauge of foreign-exchange price swings jumped to a 15-month high. JPMorgan Chase & Co.’s Global FX Volatility Index rose to 9.74 percent yesterday, the highest since September 2013. It fell to a record 5.28 percent on July 4.

Yen’s Advance

The yen has jumped 2.7 percent in the past week, the best performer 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.5 percent and the euro rose 1.3 percent.

Australia’s dollar dropped to the weakest since June 2010 after minutes of the central bank’s Dec. 2 meeting showed policy makers said the currency remains “above most estimates of its fundamental value, particularly given the significant declines in key commodity prices over recent months.”

The Aussie declined to 82 U.S. cents earlier today before rallying 0.3 percent to 82.36 from yesterday.

The rupiah slid 1 percent to 12,823 per dollar after depreciating to 12,940, the weakest since November 2008.

“We have seen portfolio outflows from Indonesian bonds and equities, with thin liquidity conditions due to year-end exacerbating the moves,” said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore.

The U.S. central bank opens a meeting today as the world’s biggest economy accelerates amid sluggish global growth. Officials of the Federal Open Market Committee will discuss whether to retain a pledge to keep borrowing costs low for a “considerable time.”

“The FOMC meeting is likely to provide the dollar with some support,” Nomura’s Goto said. “The Fed may get rid of the ‘considerable time’ language but may add that they will not raise rates as early as the first quarter.”

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 trading partners, fell 0.2 percent to 1,114.51. The gauge has risen 9.3 percent this year.

 

Source: Bloomberg – Yen Gauge Rises to Five-Week High on Haven Bid; Rupiah Declines

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