Investors look for safe havens as IMF drops growth forecast

Published: 16 Oct at 5 AM Tags: Euro, Dollar,

Another cut in the IMF’s global economic growth forecast and poor industrial output data coming from Germany last week has helped to boost the value of the yen as investors look for safe-havens. The dollar is trading at a three-week low after hitting its highest level in six years last week. The greenback has dropped from 110.09 yen to 107.82.

The euro also dropped to its lowest level in a month and was trading at 136.56 yen before clawing back some ground at 136.96. A drop in yields in the US has caused the dollar index to slide from last week’s four-year peak of 86.746 to 85.664.

Data released earlier last week by Germany shows that the country’s industrial output dropped 4.0 per cent during August compared to the previous month. This is the largest fall in output since the financial crisis was at its peak.

For the third time in a year the IMF has cut its global growth forecast, this time from 3.4 per cent to 3.3 per cent. The body is concerned that emerging markets, including Brazil, and key markets such as Japan and the eurozone will have weaker than anticipated growth.

Elsewhere, the euro has risen from a two-year low of $1.2500 to trade at $1.2669. The Aussie dollar has hit a two-week peak of $0.8835.