Posted On: February 22, 2011
The violent unrest plaguing Libya is spurring investors to buy safe-haven currencies and shun risk-linked currencies this week.
The Swiss franc rose on Tuesday, for example, while the Canadian dollar - seen as a play on global growth - declined
. Overall, Standard Chartered Bank senior currency strategist Mike Moran told Dow Jones Newswires
, market participants are growing more risk-averse.
"Risk appetite has certainly taken a hit, driven by broadening tensions in the Middle East," he said.
The popular uprising in Libya is just the latest to have taken place in the Arab world; across the region, citizens are calling for the ouster of their entrenched autocratic leaders. Libya's Moammar Gadhafi is responding more violently than his counterparts in Tunisia and Egypt, however; reports suggest that military aircraft are bombing protesters and strafing the streets with machine-gun fire.
Not only is the situation in Libya particularly violent - the country is a major oil producer. Continued upheaval in Libya could lead to a spike in oil prices; that, in turn, could slow global economic growth.
On the whole, the currency markets' reaction to the Middle East turmoil reflects how volatile currencies can be.
Category: Industry News
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