* Yen soars to three-year high with 3% jump
* Euro leaps more than 1% as U.S. yields crater
* FX volatility surges as carry trades unwound
* Oil-exposed currencies plunge
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new analyst quote, details, latest prices)
By Tommy Wilkes
LONDON, March 9 (Reuters) - The dollar fell 3% against the
Japanese yen and commodity-linked currencies tanked on Monday,
as a 30% crash in oil prices and tumbling stock markets panicked
investors and sent currency prices swinging wildly.
A gauge of volatility in the euro/dollar market - the
world's most-traded currency pair - shot to its highest since
April 2017 as the euro surged more than 1% to its strongest
since January 2019.
Dollar-yen one-month implied volatility surged to an 11-year
high at more than 18% JPY1MO=FN as the dollar slid to its
weakest since 2016.
Investors are dumping dollars because of the collapse in
U.S. Treasury yields. The benchmark yield is at 0.45%
US10YT=RR , after trading above 1% last week, as traders shed
risky assets and head for the safety of government bond markets.
Oil prices fell 30% after Saudi Arabia pledged to slash
prices and boost production following the collapse of an OPEC
supply agreement. O/R
That unnerved investors already rattled by more than a weak
of wild moves in markets, as they struggled to assess the
economic damage caused by the coronavirus.
"Financial markets have suffered a rude awakening to notions
that volatility was a thing of the past. We're now seeing the
kind of market dislocation not witnessed since the 2008-09
global financial crisis," ING analysts said, describing the
set-up as a "perfect storm" for currency markets.
"This all conspires to deliver an extreme flight to safety,
into the likes of the JPY and the CHF," they wrote.
In hectic trade, the dollar fell as low as 101.55 JPY=EBS ,
its lowest in more than three years. It was last down 3% at
102.28 yen.
The euro EUR= rallied 1.2% to $1.1419 after earlier
touching $1.1495.
The dollar index dropped to its weakest since September 2018
before recovering somewhat to trade at 95.132, down 0.3% =USD .
The Swiss franc added more than 1% against the dollar
CHF=EBS but was flat versus the euro EURCHF=EBS .
The biggest moves were in currencies linked to oil prices.
Norway's crown tumbled to record lows. The euro added nearly
5% to 10.997 EURNOK=D3 and the dollar gained more than 4% to
9.688 crowns NOK=D3 before easing back. The Canadian dollar
shed 1.5% to C$1.3622 CAD=D3 . The Russian rouble RUB= fell
as much as 6% and the Mexican peso MXN= 7% against the dollar.
The Australian AUD=D3 and New Zealand NZD=D3 dollars
fell nearly 2% before bouncing back.
"For growth-sensitive and for oil-sensitive currencies, it's
far too early to pick a bottom," said Kit Juckes, a strategist
at Societe Generale, predicting that the Norwegian crown and
Canadian dollars would get weaker.
"USD/JPY will be a source of concern to the Japanese
authorities, who have as little interest in a stronger currency
as anyone else, but USD/JPY 100 will break eventually. Japan's
net international investment position is just too healthy."
The yen is headed for its largest three-day gain since the
2008 financial crisis. It is up around 9% in a dozen trading
days.
The gain is bad news for exporters and has raised concerns
among policymakers in Japan. A senior finance official warned
that authorities were closely watching trade.
In times of low volatility - and currency market volatility
has been at or near record lows for several years - investors
borrow heavily in low- or negative-yielding currencies like the
euro and yen to buy higher-yielding FX elsewhere.
Sudden risk aversion and volatility send investors panicking
to reverse those positions, causing wild moves in currencies.
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U.S. dollar vs Japanese yen https://tmsnrt.rs/3cHaTBt
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