Yuan Struggles While the Chinese Virus Continues to Rage

The Chinese yuan dropped again in offshore trade, reaching its lowest level in three weeks. The virus outbreak continues, causing the stock market to fluctuate. Chinese authorities are trying to contain the virus. As they issued, the Lunar New Year’s holidays will continue for three more days. Hong Kong has banned the entry of travelers from China’s Hubei province.

Experts think that tourism and consumer spending futures will suffer the most from coronavirus. It has already killed 80 people and infected more than 2,700 in China. Investors have already begun to move on the safe-heaven stocks for more insurance, causing Chinese futures to lower further.

Yukio Ishizuki, the foreign exchange strategist at Daiwa Securities in Tokyo, stated that there is a lot of uncertainty about how much further the virus will spread. And this is behind the moves in currencies. It seems the risk-off mood will continue for a while.

While the yuan fell to 6.9776 per dollar in the offshore market, reaching its weakest point since Jan. 6, Japanese yen rose. Investors prefer it as one of the main safe-heaven stock. Yen grew to 108.73 per dollar, its strongest level since Jan. 8, before adding 0.16% and reaching 109.09.

However, the stock markets in China, Singapore, Australia, and Hong Kong are closed for holidays. So market moves may be exaggerated.

The Euro, Sterling, and the Dollar Remain Stable

Traders were waiting for the proceedings of two central bank meetings and the release of economic data. So, there weren’t any significant moves in the European market. The pound changed a little at $1.3060 on the dollar, and 84.46 pence per euro.

The dollar also moved slightly against a basket of six major currencies at 97.881. Meanwhile, the Bank of England spoke about the possibility of cutting interest rates this week.