Pound, euro tumble on Brexit fears as safe haven demand drives up yen

Fears of a British exit from the European Union is spooking investors, with sterling volatility hitting record highs not seen since the 2008 financial crisis.
A money changer counting the British Pound at a shop at the Arcade in Raffles Place in Singapore.
A money changer counting the British Pound at a shop at the Arcade in Raffles Place in Singapore. PHOTO: ST FILE

SINGAPORE (Bloomberg) - The pound tumbled and the yen strengthened against its 16 major peers on Monday (Jue 13) as anxiety about a potential British exit from the European Union fueled demand for the safest assets.

Hedge funds added to net bullish bets on the yen for the first time in seven weeks as traders ruled out the possibility that the Federal Reserve will raise interest rates on June 15, a day before the Bank of Japan also decides on policy. The pound weakened for a fourth day after a poll showed the campaign for Britain to leave the EU took a 10 percentage-point lead before the June 23 referendum.

"There are genuine Brexit risks as the price action in the yen suggests," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. "It looks quite clearly, there's been some safe-haven trade that's filtering through."

Sterling slumped 0.4 per cent to US$1.4207 as of 9:17 am on Monday in Tokyo, extending a three-day, 2 per cent tumble. It dropped 0.4 per cent to 79.16 pence per euro. The yen advanced 0.4 per cent to 106.58 per US dollar.

The euro fell to 119.87 yen , a level last seen in April 2013.