The China virus outbreak sent the Asian stock market into a tumble. The yuan declined about 0.55% on Tuesday, reaching the bottom line in the onshore trade in nearly five months. It was trading at 6.9063 per dollar.
The Australian dollar also dropped to $0.6827, its lowest point during the last six-week period. But after a while, it increased to $0.6837. On the other hand, the yen steadied at 109.98, after it rose from Tuesday’s 110.23 per dollar.
The virus spread from central China, encasing Shanghai and Beijing and killing six people. During the last days, the patients’ number almost tripled. The coronavirus has already reached other countries also, including America, causing the U.S. stock downfall. Experts fear that this virus can prove as sever as the 2002/2003 outbreak, which killed almost 800 people worldwide. Asian tourism collapsed at that time.
Despite the Virus-Induced Panic, the Euro Stood at $1.1083
Meanwhile, Sterling has gained a little on Tuesday. It traded at $1.3040 thanks to the new data, which showed that the British economy increased the rate of created jobs, reaching the record high in almost a year.
It’s hard to tell how the outbreak will turn out yet. Tohru Sasaki, head of Japan’s market research at JPMorgan, said that the virus had a limited impact on supply chains in Asia. Even though there was a massive economic downturn in Singapore and Hong Kong for about eight weeks through a drop in tourism.
Ayako Sera, the market economist at Sumitomo Mitsui Trust Bank, noted that companies need to think about their contingency plans. But given the lack of further information, there isn’t much to make a thorough case for trading in either direction for financial markets.
Sera also thinks that if the latest virus outbreak reaches a similar magnitude, as the last one, some economies such as Singapore, Thailand, and Malaysia could be negatively affected by a drop in tourism. Nonetheless, experts hope that its long-term impact on the global economy and the currency market will be limited.