Capital Economics: Do Not Bet on the Yen Regaining Its Safe-Haven Status During the Iran Crisis

Golden Ten Data reported on March 13 that Thomas Matthews, Head of Asia-Pacific Markets at Capital Economics, stated that investors should not bet on the yen returning to its status as a safe-haven asset during the ongoing Iran crisis. Matthews said there are two factors that may have weakened the yen's appeal as a safe haven. Matthews pointed out: "Firstly, among the G10 currencies, the yen is particularly sensitive to energy prices. Secondly, relative yields have shifted significantly in a direction unfavorable to the yen." He stated, "All of this means that during the current crisis, investors should not expect the yen to regain its status as a safe-haven currency." Matthews added that, given the yen's movement (approaching 160 against the US dollar) can be said to have fundamental support, this may also weaken the rationale for foreign exchange intervention.