Why the yen jumped

Glenn Uniacke, senior merchant, Moneycorp

"If Britain has been facing a crisis similar to the Japan, it is fair to assume sterling would be under huge pressure.". Yet Japanese devastating tsunami and possible cast iron of the power plant of Fukushima added on 5MC to the value of the yen, sending it to its highest ever level against the dollar. Why?

They call it "repatriation". There is a strong tradition of foreign investment in the Japan, made even stronger in recent years by the zero or near zero interest rates set by the Bank of the Japan for a decade. Everyone, from the man in the street by the Central Bank insurance undertakings, a foreign currency investments. Now, with homes and cities and to rebuild power stations and insurance claims massive deal, they need their money.

If the assets denominated in dollars, pounds and euros and rand is to be repatriated. This means that the purchase of yen. And nobody sells, so the price rises. An additional upward pressure comes from speculators whose task is to identify these movements and to take advantage.

The last thing that wants the Japan or needs now is a yen fort, but for the moment, it seems that it will have to live with a. »

Lee Hardman, Economist at Bank of Tokyo - Mitsubishi currency

"This whole move can be wedged speculative positioning rather than any repatriation flows and in the short term there is a risk that it will certainly continue." Since it is speculative led intervention here should work and erase some of the positions long yen built. »

Lee McDarby, Investec Corporate & Treasury institutional

"The mere force of the appreciation of the yen is staggering, but there may be more to function as persistent rumours, that domestic insurers can be forced to repatriate assets to cover the costs of insurance payments." Later, these rumours have been minimized by the Japanese Government. Steaming nuclear reactors take the market on edge, but the Nikkei managed to navigate himself through last night without too much turmoil and finished only 1. 4pc downwards. The sense of "risk off" is feeding through to the foreign exchange market, but notably not by means of the alleged "haven" of the US dollar and instead, such as the Swiss franc and the yen.

"The effects of the disaster at the Japan are fed through the book..." Headlines negative on growth and jobs will be not exactly stir up on potential rate increases to the United Kingdom and therefore the pound sterling is being left defenceless against the appetite for currencies, such as the euro, yen and Swiss franc.

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