Russia versus Turkey and the Demand For Safe-Haven Currencies


Nov. 24 2015, Published 4:23 p.m. ET

Safe-haven currencies appreciate

Safe-haven currencies see increased investor demand when there’s uncertainty in the market. The major safe-haven currencies include the Japanese yen, the Swiss franc, and the US dollar. The euro also has started to react like a safe-haven currency. The rise of geopolitical tension in Syria Today, on November 24, with Turkey shooting down a Russian plane near the Syrian border, meant that there was again demand for safe-haven currencies.

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The increased tension saw safe-haven currencies increase in value. The US dollar to the Japanese yen pair, which is inversely related to the Japanese yen, fell to a low of 122.37 while the US dollar to Swiss franc pair, which is inversely related to the Swiss franc, fell to a low of 1.02. Among other major currencies, the euro to US dollar pair rose to a high of 1.07 during early trading today.

Impact on the market

Looking at ETFs’ reaction to the geopolitical event on November 24 (as of 16:35 GMT), we see that the iShares MSCI Japan (EWJ) rose 0.23%. The iShares MSCI Switzerland Capped ETF (EWL) fell 0.45%.

Banking ADRs (American Depository Receipts) were trading on a negative note early on November 24, with Credit Suisse Group AG (CS) falling 0.76%. Japanese Banking ADRs Mitsubishi UFJ Financial Group (MTU) and Sumitomo Mitsui Financial Group (SMFG) fell 1.4% and 0.78%, respectively. Japanese leisure goods maker Sony (SNE) rose 0.37%.


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