Sunday Dec 15, 2024
Sunday Dec 15, 2024
Wednesday, 29 January 2020 00:00 - - {{hitsCtrl.values.hits}}
TOKYO (Reuters): The yuan was mired near its weakest level in a month in offshore trade on Tuesday as heightened anxiety about the economic impact of a deadly new coronavirus in China battered riskier assets.
The Japanese yen, considered a safe-haven, traded near a three-week high versus the dollar as investors nervously watched the death toll from the virus climb to more than 100.
Global stocks and oil prices have tumbled over recent sessions on fears the virus could do further damage to China’s already weakened economy, an engine of global growth.
Chinese authorities have stepped up efforts to curb the spread of the virus, imposing stiff restrictions on travel and movement of people. Many of the largest Chinese cities in central Hubei province, where the flu-like virus originated late last year, are already on lockdown.
Scores of Chinese are cancelling travel plans during the Lunar New Year, normally the busiest tourism season, while businesses in many cities have shut down.
“We still do not know the full scale of this outbreak, which is not only a public health problem but also an economic problem,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.
“There are worries about the impact on tourism and China’s broader economy, which affect global economic growth forecasts. The yuan is likely to be sold, and the yen is likely to rise.”
In the offshore market, the yuan was quoted at 6.9813 per dollar, near its weakest since 30 December. China’s onshore markets are closed this week for Lunar New Year.
The yen held steady at 109.01 per dollar, close to its strongest level since 8 Janaury.
Japan’s currency has risen for the past five trading sessions against the greenback due to the growing risk aversion.
The dollar index against a basket of six major currencies was little changed at 97.932 following a 0.86% increase on Monday.
The coronavirus has spread to more than 10 countries. So far no fatalities have been reported outside of China.
The outbreak has evoked memories of Severe Acute Respiratory Syndrome (SARS) in 2002-2003, another coronavirus which broke out in China and killed nearly 800 people in a global pandemic.
The Australian dollar traded at $ 0.6754, close to a three-month low. The New Zealand dollar was quoted at $ 0.6541 after falling on Monday to its lowest since mid-December.
Both countries have extensive trade ties with China, with tourism and education especially vulnerable to disruption from the virus.
The US dollar was quoted at $ 1.1021 per euro, close to its strongest since December.
Officials from the US central bank are scheduled to meet on Tuesday and Wednesday. They are expected to reiterate the Federal Reserve’s desire to keep rates unchanged at least through this year.
The Bank of England also announces a policy decision on Thursday that many analysts say is too close to call.
The pound was little changed at $ 1.3064 on the dollar and at 84.37 pence per euro.
Dovish comments from BoE policymakers have fuelled some expectations for monetary easing, but improving economic data has cast doubt on this view.
