Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Asian currencies arrest slide as WHO confident in virus response

Published 2020-01-30, 09:01 p/m
Updated 2020-01-30, 09:05 p/m
Asian currencies arrest slide as WHO confident in virus response

By Tom Westbrook

SINGAPORE (Reuters) - Asian currencies arrested their slide on Friday as confidence from the World Health Organization in China's response to a new virus and upbeat data from the world's second biggest economy tempered worries over a jump in new infections.

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.

Together with official data showing Chinese services activity picking up this month, that was enough to pause selling from investors who are waiting for more information about the virus to judge its likely human and economic costs.

The death toll in China has now reached 213 and the number of cases is 9,692 - up from 7,711 a day ago.

The Australian and New Zealand dollars, which dipped on the news of rising deaths, recovered after the services data to hold steady. China's yuan 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 Aussie is 4.1% weaker this month and, if the selldown does not reverse, is headed for its worst month since May 2016.

"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.

Some 60 million people in the epicenter of the outbreak, Hubei province, are living under virtual lockdown. Several global airlines have stopped flying to mainland China and economists are slashing their forecasts for Chinese growth.

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

The yen 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).

In Thailand - heavily exposed to Chinese tourism - the baht, which has stubbornly resisted months of jawboning and policy easing from the central bank, has shed 4% for the month.

"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.

"We're probably going to hear a much clearer definition about how this is contained somewhere between the 3rd and 8th of February."

Separately, relief the Bank of England held rates steady sent the British pound up 0.7% to a week high. Britain's market watchdog, however, is investigating the move because it began just before the bank's announcement.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.