Tags: yuan | china | currency | virus

WSJ: Yuan Falters as China Battles Wuhan Virus

WSJ: Yuan Falters as China Battles Wuhan Virus
(Dollar Photo Club)

Monday, 27 January 2020 08:42 AM

China's yuan tumbled to a 2020 low on Monday as the widening spread of the Wuhan coronavirus fanned worries of a deeper economic slowdown in parts of the country.

The slide erased recent gains chalked up after the U.S. removed China from list of currency manipulators, the Wall Street Journal said.

Health authorities around the world are working to prevent a pandemic of the virus, which has killed more than 80 people in China. Nearly 2,800 people have been infected globally. China's National Health Commission said on Sunday the ability of the virus to spread was getting stronger, Reuters said.

China's government announced it would extend the Lunar New Year holidays to help prevent and control the virus.

Hong Kong has also banned the entry of people who have visited the province of Hubei in the past 14 days. The outbreak was first reported in Hubei.

RBC Capital Markets' FX strategist Elsa Lignos said that while some would argue that fears about the virus were overdone, given the low mortality rate, "the bigger worry is the economic impact of containment and quarantine strategies, particularly in China."

The offshore yuan shed more than 0.8% to 6.99 yuan per dollar, its weakest since Dec. 30.

After rallying to a five-and-a-half month high earlier in January, the yuan has gone into a tailspin. The dollar has gained more than 2% versus the Chinese currency since last Monday.

“The bad news is that the worst has yet to come, as the number of new infections is still on the rise,” Larry Hu, chief China economist at Macquarie Capital Ltd., told the Journal.

Ken Cheung, chief Asian foreign-exchange strategist at Mizuho Bank in Hong Kong, said some investors who profited from the yuan’s recent climb have closed out their positions ahead of the Lunar New Year break. “They’re wary of an escalation of confirmed cases after the holiday,” he said.

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China's yuan tumbled to a 2020 low on Monday as the widening spread of the Wuhan coronavirus fanned worries of a deeper economic slowdown in parts of the country.
yuan, china, currency, virus
315
2020-42-27
Monday, 27 January 2020 08:42 AM
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