Drop in oil prices boosts the yen

Published: 6 Jan at 10 AM Tags: Euro, Dollar,

Concerns about another dip in oil prices and the general state of the global economy has created investor risk aversion and given a boost to the safe-haven yen.

The euro is currently hovering around its lowest level in nearly nine years as analysts worry the eurozone is headed for further deflation. The European Central Bank has hinted it is prepared to introduce further monetary easing.

Stocks in Asia, Europe and the US have all dropped because of weak oil prices and uncertainty ahead of an election in Greece. The dollar dipped to 118.65 yen after hitting 120.68 yen on Monday. The US currency is also down against the Swiss franc at 1.00655 francs.

Some analysts are predicting that the dollar will recover against the yen and the euro is likely to go lower. The single currency is trading at $1.1935 after hitting $1.1860 on Monday. The euro has not been this weak since the beginning of 2006 and is not being helped by reports that Greece could quit the eurozone.

The drop in oil prices has dented the performance of the commodity currencies. The Canadian dollar is close to a five-year low at C$1.1765 per US dollar. The Norwegian crown is also suffering at 7.6190 crowns per US dollar.