March 14 (Bloomberg) -- The yen gained for a fifth day versus the dollar, the longest stretch in 10 months, as investors sought haven assets before a referendum this weekend that may lead to Crimea’s secession from Ukraine.
The ruble dropped versus most of its 31 major counterparts as Russia remained on a collision course with the West after six hours of talks between the country’s top diplomats failed to ease tensions. The euro jumped as much as 0.5 percent versus the dollar amid speculation technical signals triggered automatic selling orders, known as stops.
“Definitely the market is very nervous on Russia, the Ukraine situation and the Crimea vote this weekend -- it’s driving all risk off,” said Masafumi Takada, a New York-based director at BNP Paribas SA.
The yen climbed 0.5 percent to 101.29 per dollar at 4:23 p.m. in New York, extending this week’s gain to 2 percent, the biggest since Jan. 24. It last ended a five-day winning streak on May 1. Japan’s currency rose 0.3 percent to 140.86 per euro. The shared currency rose 0.3 percent to $1.3907 and touched $1.3937. The Swiss franc appreciated 0.2 percent to 87.26 centimes per dollar.
“It looks like a few euro-dollar stops have been taken out,” Stephen Collins, global head of dealing at the money manager London & Capital Group Ltd., said in a telephone interview from London.
Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, rose for a second day. It increased to 7.49 percent after falling to 7.14 percent on March 12, the lowest level since December 2012.
The ruble depreciated 0.2 percent to 36.6326 per dollar and touched 36.7037, the weakest level since March 3.
U.S. Secretary of State John Kerry met in London with Russian Foreign Minister Sergei Lavrov to press the nation to halt a takeover of Ukraine’s Crimean peninsula.
The mostly Russian-speaking region is scheduled to vote on secession on March 16. German Chancellor Angela Merkel said yesterday Russia is risking “massive” political and economic damage.
Russia’s president, Vladimir Putin, “is not prepared to make any decision regarding Ukraine until after the referendum on Sunday,” Kerry told a news conference after the meeting. Russia “will respect the will of the Crimean peoples,” Lavrov told a separate news conference, saying there’s “no common vision” on resolving the crisis. Russia has no plans to invade the region, Lavrov said.
Ukraine has asked the U.S. for military assistance and equipment, according to an American defense official, who asked not to be identified discussing private communications. Pentagon officials have indicated the focus at the moment should be on diplomatic and economic aid, the person said.
“Markets will continue to position defensively ahead of the Crimean referendum on Sunday, with investors wary of potential further escalation of geopolitical risks,” said Valentin Marinov, head of European Group-of-10 currency strategy at Citigroup Inc. in London. “Liquid safe havens like the yen and Swiss franc should do well. The market is turning short U.S. dollars against the majors.” A short position is a bet an asset will fall.
Futures traders increased their bets the franc will gain against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the franc versus those on a drop -- so-called net longs -- was 8,957 on March 11, compared with net longs of 2,168 a week earlier.
The difference in the number of wagers by large speculators on a decline in the yen against the greenback versus those on a gain -- so-called net shorts -- increased to 99,356, compared with net shorts of 79,709 a week earlier.
The dollar remained lower versus the yen as the Labor Department reported the U.S. producer price index fell 0.1 percent after a 0.2 percent rise the prior month. The median estimate in a Bloomberg survey called for a 0.2 percent increase. Over the past 12 months, wholesale prices increased 0.9 percent.
“It was a fair bit lower than our expectation,” Brian Daingerfield, a Stamford, Connecticut-based currency strategist at Royal Bank of Scotland Group Plc, said in a phone interview. “The reaction has been fairly muted in the foreign-exchange space.”
The yen has risen 3.5 percent this year, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 0.4 percent, while the U.S. dollar fell 0.9 percent.
The Bank of Japan maintained record stimulus this week, keeping ammunition amid speculation a sales-tax increase in April will hurt the economy. Analysts surveyed by Bloomberg predict the economy will shrink 3.8 percent in the second quarter, when an increase in the consumption tax is scheduled to take effect.
South Africa’s rand was the biggest winner among the dollar’s major counterparts, gaining 1.2 percent to 10.6828 to the greenback.
South Korea’s won, the biggest loser, declined 0.3 percent to 1,072.78 to the greenback. It had its largest weekly drop in almost two months, 1.1 percent, as slowing economic growth in China, the nation’s biggest foreign market, prompted investors to seek safer assets.
Overseas investors sold $1.2 billion more South Korean stocks than they bought this week as official data showed exports in China contracted the most since 2009 in February and factory output rose less than forecast in the past two months.
The Canadian currency, also among the biggest losers, declined 0.2 percent to C$1.1096 per U.S. dollar.