The Chinese Yuan plummeted down to a one-month low against the U.S. dollar on Friday. The currency dropped down by 0.7% to 7.1350 versus the greenback in the offshore market, reaching its lowest point since April 2nd.
U.S. President, Donald Trump’s, accusation to China about mishandling the outbreak of the novel coronavirus caused the Yuan’s downfall. Trump announced on Thursday that he believed the virus might have originated in a virology lab in Wuhan, the Chinese city where the outbreak began.
However, the Chinese state-backed Wuhan Institute of Virology has dismissed the allegations. Other U.S. officials have also downplayed their likelihood. Still, Trump threatened new tariffs on Beijing.
Derek Halpenny, the head of research at MUFG, noted that given the scale of the coronavirus’ impact, there is a high risk of geopolitical tensions escalating considerably as lockdowns reverse. That would be another hit to global trade, adding a layer of support to the dollar going forward.
Meanwhile, the Australian dollar declined by more than 1% to 0.6438, reaching its weakest point since Tuesday. The Canadian dollar dropped down by 0.5% to 1.4016 against the greenback as well.
What about the U.S. dollar and Euro?
The Euro rose by 0.2% at $1.0977 on Friday. It also steadied against the U.S. dollar after rallying the day before a two-week high due to news that the European Central Bank will make loans to banks even cheaper.
The majority of Europe and Asia were closed on Friday for International Workers’ Day. However, a new month brings a new set of worries to traders as coronavirus infections increased to 3.3 million globally, claiming more than 230,000 lives.
The U.S. dollar declined against the Japanese yen, trading down 0.3% at 106.88 yen. The sterling also gave up some of the gains from the day before. It traded down by 0.2% against the dollar at $1.2566 and by 0.4% against the Euro at 87.34 pence.