NEW YORK, Jan 28 ― The US dollar index, the Japanese yen and the Swiss franc strengthened yesterday, while the offshore yuan tumbled and the Australian dollar notched a four-month low as fears about the spread of the coronavirus in China pushed investors into safe-haven assets.
Health authorities around the world are working to control the coronavirus outbreak that has killed 81 people in China, stranded tens of millions during the biggest holiday of the year and rattled global markets. Investors are worried about the impact on travel, tourism and broader economic activity.
“Markets are all coughing and wheezing with the virus,” said Shaun Osborne, chief foreign exchange strategist at Scotia Capital.
“You look at the price action across markets generally and it has been a day of outperformance for safe-havens. Markets are concerned that this is another SARS-like episode that could dampen the global economy to some extent.”
While safe-haven assets have strengthened, currency moves were limited. The yen was the main beneficiary, up 0.35 per cent to 108.89, although it remained well below the peak hit on January 8. The dollar index was up 0.09 per cent, last at 97.941. The Swiss franc was up 0.18 per cent to 0.969 per dollar.
The possibility of a rapid turnaround in the event the virus is contained explains the relatively muted move in the dollar, said Juan Perez, senior foreign exchange trader and strategist, Tempus Inc.
“We do think the dollar this week, if nothing improves, will continue on this strong run. But of course, anything at any moment can change if the headlines do turn.”
The offshore yuan shed as much as 0.9 per cent to 6.99 per dollar, its weakest since December 30.
The yuan has gone into a tailspin since it rallied to a 5-1/2-month high earlier in January. The dollar has gained more than 2 per cent versus the Chinese currency since last Monday.
The Australian dollar, which is exposed to the Chinese economy, was last down 1.01 per cent to US$0.676 (RM2.75), having hit its lowest since October 16 earlier in the session.
Traders said low liquidity helped exacerbate market moves. Financial markets in China, Hong Kong, Singapore and Australia are closed for holidays.
The euro fell to a two-month low against the yen of ¥119.92 and was last 0.38 per cent lower on the day to 119.97. ― Reuters
