The yen approached the strongest in four months against the euro as increasing violence in Iraq boosted speculation crude oil supplies will be disrupted and bolstered the appeal of haven assets.
Japan’s currency rose versus all of its 16 major peers after Iraq’s military attacked Sunni Muslim insurgents who had captured territory north of Baghdad, trying to turn back battlefield advances that threaten to split apart the country. The euro dropped versus the yen and the pound before a report that economists say will confirm the region’s inflation slowed in May, boosting the case for additional monetary stimulus that tends to debase a currency.
“Oil prices are rising rapidly as the situation in Iraq escalates,” said Nagayuki Yamagishi, a senior analyst in Tokyo at Money Square Japan Inc., a foreign-exchange broker. “That may have a big impact on world growth, dampening stocks. The yen may strengthen amid risk aversion.”