Yen’s ascendance continues on Ukraine concerns

The Japanese yen has strengthened every day this week, as market participants reshuffle their portfolios ahead of this weekend’s referendum on Crimea.

Sentiment in the forex market has been risk-off all week, partly because of China, partly because of Russia, but as we draw closer to the Crimea vote, it is the latter that is jangling nerves.

US Secretary of State John Kerry held talks in London today with Sergei Lavrov, Russia’s foreign minister. Though Mr Lavrov described the meeting as constructive, he admitted US and the Russia have ‘no common vision’ regarding the Ukrainian crisis.

Mr Lavrov said Russia would respect the result of Sunday’s referendum in which Crimeans are set to vote on whether to secede from Ukraine and join the Russian Federation. Mr Kerry said the referendum is ‘illegitimate’ and renewed his warning that there would be consequences if Russia does not change course.

Fears that the situation could soon escalate have led to flows into safe haven instruments, helping the yen to advance 1.8% this week against the dollar, its biggest weekly gain since 24 January. By mid-afternoon in New York, USD/JPY had fallen 0.51% to $101.35.

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