The yen soared to its highest level in three years against the euro on Tuesday, as more investors grow increasingly concerned about a potential Brexit. Chances of Britain voting to leave the European Union increased, leading investors to safe havens, like Japan’s currency.
New opinion polls out of the U.K. show the “Leave” campaign ahead of the “Remain” campaign just nine days ahead of the vote. The Sun, Britain’s best-selling newspaper, also endorsed the “Leave” campaign, sending the sterling to a two-month low of $1.4112.
The dollar advanced half a percentage point against the euro and other major currencies. The Swiss franc, another safe haven currency, touched a three-month high against the euro.
Strong resistance at 105.50 has kept the yen from reaching 100 per dollar, a level that may force the Bank of Japan to intervene. The yen’s surge comes just days before the Bank of Japan’s monetary policy meeting.
Traders are now speculating whether the BoJ will take steps to weaken the currency on Thursday. The central bank will also need to consider the possibility of a Brexit, which would likely send the yen soaring once again as investors focus on safe havens.
The market is also speculating the roles the Bank of England and other central banks will play in the Brexit vote.
Experts have warned the bank that it should be prepared to intervene to stabilize the sterling. The IMF has also urged the bank to keep swap lines open to other central banks should foreign exchange be necessary.
The sterling is all but guaranteed to make a sharp move the night of the vote. Traders previously assumed that only a vote to leave the EU would cause a shock, but now that the risks are balanced, either decision will have the same effect.
The sterling fell against the greenback in London’s morning trade, but recovered against the euro at 79.19 pence.