Asian currencies regain on WHO confidence, Chinese data

Published On: January 31, 2020Categories: Stocks & Shares1.6 min read

Asian currencies regained as the World Health Organization expressed confidence in China’s response to the coronavirus and positive Chinese data

Asian currencies regained some footing on Friday as the World Health Organization expressed confidence in China’s response to the ongoing coronavirus outbreak as well as positive data on the Chinese economy.

The slide in Asian currencies paused as official Chinese data showed a rise in services activity this month, providing the much-needed boost to investors.

The WHO said late Thursday the outbreak was a global emergency, but China’s response so far will “reverse the tide” of the virus’ spread.

The number of cases has reached 9,692 while the death toll from the virus outbreak now stands at 213.

The Australian and New Zealand dollars recovered following the services data. China’s yuan CNH= was little moved at 6.9793 per dollar.

The Antipodean currencies have been pounded in recent weeks as investors pour out of assets exposed to the virus’ fallout in China.

The Australian dollar is 4.1% weaker this month and may have its worst month since May 2016 if the selldown continues.

Aussie and kiwi are what I’ve called the whipping boys, if you like, for expressing concern about the spreading of the virus and its potential global economic ramifications, said Ray Attrill, Head of FX Strategy at National Australia Bank.

Hubei province, where the virus originated, is under a virtual lockdown affecting around 60 million people.

The yen and dollar have been beneficiaries of the resulting flight to safety.

The yen JPY=EBS was steady at 109.00 per dollar and the greenback stable at $1.1030 per euro EUR=EBS in morning trade.

Against the Australian dollar, the yen has added 3.2% in the 10 days since concerns about the virus began roiling markets AUDJPY=. Against the Korean won, the yen has gained nearly 4% KRWJPY=R.

The problem for markets is the inability to price risk because lack of certainty around this, said Chris Weston, Head of Research at Melbourne brokerage Pepperstone.

He said, we’re probably going to hear a much clearer definition about how this is contained somewhere between the 3rd and 8th of February.

About the Author: Jonathan Adams

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