Safe-haven currencies were in demand on Wednesday. The Japanese yen increased slightly versus the British pound to $1.2321, as well as the euro to $1.0878. Furthermore, the yen rose against the dollar by 0.1%. The U.S. currency traded lower to 108.55 yen by the end.
The Japanese authorities issued a new policy to slow down the infection, causing their currency to soar. Before that, the yen declined recently due to the traders’ concerns about the virus’s rapid spread in Japan.
Even though the virus’ curve is flattening, the economic effects of the corona crisis will linger for years – stated Joe Capurso, the currency analyst of Commonwealth Bank of Australia.
He added that unemployment would take years to recover, and some businesses probably will not re-open. However, experts predict further gains for the dollar and the yen.
How did the U.S. dollar fare?
The U.S. dollar climbed up on Wednesday after falling on Tuesday. As the investors returned to safe-haven currencies, the greenback skyrocketed against most major currencies.
While the safe-haven gains were slight at first, they soared in morning trade as the two-day rally in Asia’s equity markets slowed down, and gold and bonds remained firm.
The U.S. currency gained the most against the risk-sensitive Australian and New Zealand dollars. It rose by 0.5% versus each one, trading at $0.6142 per Aussie and $0.5951 per kiwi. Risk-aversion and the U.S. dollar go hand in hand – noted Ray Attrill, the head of FX strategy at National Australia Bank in Sydney.
The greenback increased by 0.5% against the Korean won. Furthermore, it climbed up by 0.1% to 7.0730 yuan in offshore trade in Asia. This is a rise from a three-week low against the Chinese yuan.
Chinese Authorities are trying to allow greater freedom of movement while simultaneously preventing a second wave of infection, which isn’t an easy task. Especially as there are people who show no symptoms but can still pass on the virus.