Safe Haven Yen Higher on Trade War Fears – 23 March 2018

Safe Haven Yen Higher on Trade War Fears – 23 March 2018

The Japanese Yen moved higher against the US Dollar after the US President stoked investors’ fears of a brewing trade war. Donald Trump signed off on an executive order yesterday which would place tariffs on $60 billion in Chinese imports. The implementation of the tariffs would take place after the 30-day consultation period. What is driving investor fears is that the Chinese government could retaliate in kind, escalating a global trade war that analysts say could have disastrous economic consequences around the globe.

As reported at 10:26 am (JST) in Tokyo, the USD/JPY was trading at 104.858 Yen, down 0.44%; the pair earlier hit a trough of 104.631 Yen while the peak was at 105.346 Yen. Asian equities also tumbled after the rout on Wall Street yesterday, with the Japanese Nikkei losing 1.9% and the South Korean Kospi down nearly 2%.

Trump Holds Key to Impact

Analysts say that in the long run, the Trump administration’s protectionist policies might eventually be diluted, for example, Trump spoke of possible exemptions from tariffs on steel and aluminum imports. Those concessions would limit the negative impact on the global economy. However, until the US government officially makes those concessions, global equities will continue to come under pressure and the Japanese Yen will continue to benefit from trade war fears.

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