By James Ramage
The Japanese yen rose modestly against the euro and the dollar
Monday as investors sought to protect wealth amid concerns that
Greece has moved closer to exiting the eurozone.
The yen rose 0.7% toward a five-week high against the common
currency, with one euro buying Y135.50 in late-afternoon trade. The
yen also increased 0.2% against the dollar, trading at Y122.54
against the U.S. currency.
Analysts and strategists expected volatile markets Monday in
response to Greece's vote over the weekend to reject the terms of
its international creditors' most recent proposal to extend their
expired bailout. And while investors shed some stocks and
emerging-market currencies, which were deemed risky, the selloff
and subsequent move into haven assets, such as the yen, was
subdued.
Investors have been moving into the Japanese currency,
particularly against the euro, over the past couple of weeks as
they doubted Greece would find common ground in its negotiations
with creditors, who include the European Commission, the European
Central Bank and the International Monetary Fund. The thinking held
that Greece's inability to secure a new bailout deal could lead it
to exit the European Economic and Monetary Union and possibly
destabilize financial markets over the potential for a dissolution
of the common currency.
"No one knows what this government will do with this public
backing," said Jens Nordvig, global head of currency strategy at
Nomura Securities International Inc. "People are very reluctant to
put on fresh risk [such as equities] in their portfolios...Three
years of euro crisis showed that the euro is a vulnerable
thing."
Some analysts said Sunday's vote brought clarity on Greek
citizens' views on undertaking further austerity measures to repair
the economy in order to receive a new bailout package, while others
perceived the results as driving a further wedge between the
embattled country and its creditors.
Alan Ruskin, global head of developed-market currency strategy
at Deutsche Bank, wrote in a research brief that the markets were
resilient Monday because most participants remain optimistic that
Greece will reach a deal with its creditors or believe that
Greece's exit from the eurozone wouldn't disrupt global markets
over the short term.
The euro retreated 0.5% against dollar to $1.1057. The common
currency pulled back from $1.1002 reached earlier in the Americas
session.
Write to James Ramage at james.ramage@wsj.com