Asian currencies fall on fears about China virus


  • Forex
  • Tuesday, 21 Jan 2020

The onshore Chinese yuan slipped 0.4%, while the offshore unit weakened past 6.9 against the dollar, even as broader Asian equities and base metal prices dropped sharply on the news.

BENGALURU: Most Asian currencies slipped on Tuesday, as concerns about a new strain of coronavirus in China took a toll on risk appetite.

China reported a fourth death from the flu-like coronavirus as the number of cases continued to rise, sending jitters through Asian markets as hundreds of millions of Chinese are expected to travel for the Lunar New Year holiday.

The onshore Chinese yuan slipped 0.4%, while the offshore unit weakened past 6.9 against the dollar, even as broader Asian equities and base metal prices dropped sharply on the news.

Countries reporting the outbreak could face selling pressure on their currencies next week, wrote Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.

"The rally in Asia Inc. FX markets is over for now until we have more clarity on SARS 2.0.," he said, referring to the deadly SARS virus outbreak in 2003 that plunged Hong Kong into recession and led to a slowdown in China.

The South Korean won lost 0.7% to fall the most in the region and took an added hit after data showed exports to China in the first 20 days of January dropped 4.7%.

Overall exports, however, fell at their slowest pace in a year, helped by a recovery in chip sales.

Currencies closely linked to the yuan's movements, the Malaysian ringgit and Singapore dollar weakened 0.2% each.

A Reuters poll showed Malaysia's central bank is largely expected to keep its benchmark interest rate unchanged at its meeting on Wednesday, saving ammunition for use for a possible economic slowdown later in the year.

Meanwhile, the Thai baht held firm at 30.34 against the greenback. The baht was the region's only gainer, aside from the Japanese yen, which benefited from safe-haven demand during the spreading panic.

On Monday, Thailand's central bank further relaxed mortgage lending rules to help home buyers, easing tighter regulations that were imposed last year to rein in bad debt. - Reuters


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new strain , coronavirus , risk appetite , ringgit

   

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