* Yen broadly firmer in otherwise lacklustre session
* Risk appetite curbed by worries over China, Ukraine
* Aussie underperforms among major currencies
By Ian Chua
SYDNEY/TOKYO, March 12 The yen held firm on
Wednesday while investors kept their distance from riskier
currencies such as the Australian dollar amid worries about
China's economic health and tensions over Russia's seizure of
the Crimea region of Ukraine.
Falls in regional shares as well as copper added to the
caution mood on the state of the global economy, though the
reaction in the currency market has been relatively mild.
"China seems to be slowing down and the Russian economy
seems to be facing pressure as stock prices there have fallen
sharply. That could slow emerging economies further," said
Takako Masai, manager of forex at Shinsei Bank in Tokyo.
"There is real concern about the global economy at the
moment, even if some short-term players may be thinking that the
impact of the Ukraine crisis will gradually subside," she added.
The yen stood at 103.01 yen to the dollar, off a
six-week low of 103.77 yen hit after strong U.S. job data last
The yen tends to outperform the other major currencies in
times of heightened market stress, particularly against
commodity currencies such as the Australian dollar.
The standoff in Ukraine showed little apparent sign of
easing as Ukraine's acting president announced the formation of
a volunteer national guard, while ousted leader Viktor
Yanukovich insisted he remained the legitimate leader.
Further working against the Aussie were concerns about a
slowdown in Chinese economic growth and a recent slide in the
price of iron ore, Australia's biggest export earner.
The price of copper, another major export product of
Australia, tumbled sharply as Shanghai futures fell 5
percent to their lowest since 2009 on concerns about the
potential unravelling of loan deals where the industrial metal
has been used as collateral.
The confluence of negative factors saw the Aussie slide to
92.30 yen from a 3-1/2-month high of 94.45 yen hit on
Friday. Against the greenback, the Aussie was once again below
90 U.S. cents.
"There are a lot of questions around China's situation right
now: is industrial and consumer demand fading, are we about to
see further defaults across the financial spectrum, is the
credit crunch about to resurface," said Evan Lucas, strategist
at IG in Melbourne.
"All of these macro issues are feeding into China hysteria.
What is compounding the situation is the emergence of how much
copper and ore is being used as collateral."
The euro was also briefly unsettled after a European Central
Bank official warned the bank could still ease if needed.
ECB Vice President Vitor Constancio was also reported as
saying markets had not fully taken in the point the ECB made
last week when it emphasized on the slack in the euro zone
His comments saw the euro cede ground against the U.S.
dollar and yen. It last traded at $1.3855 nursing losses
of up to 0.4 percent from its high on Friday.
The New Zealand dollar held steady at $0.8472, with
investors reluctant to sell the kiwi given the Reserve Bank of
New Zealand (RBNZ) is widely expected to hike interest rates on
A Reuters poll this week showed the RBNZ is set to raise
rates by 25 basis points and lay out a path for a series of
further increases, taking the lead among developed economies in
The Bank of Thailand, on the other hand, is likely to cut
interest rates later in the day to help Southeast Asia's
second-largest economy cope with prolonged political unrest in