FOREX-Yen, Franken wins due to fears of Chinese viruses; Yuan falls

* Graphic: World currency rates in 2019

By Saikat Chatterjee

LONDON, June 11 / PRNewswire / – The rising death toll from a virus spreading in China has sent investors under the protection of the Japanese yen and the Swiss franc, while China’s yuan fell to a monthly low.

The Chinese yuan in the offshore market, which is widely regarded as a barometer of Chinese asset risk sentiment since the mainland and Hong Kong markets are closed, fell to a 1-month low below the psychological 7-yuan level in early London trading, the lowest level since late December.

Risk aversion also drove the Aussie and the kiwi dollar, while the Japanese yen and the Swiss franc gained.

As the new pneumonia spreads rapidly in China, the dollar is becoming an ultimate safe haven destination, and its high interest rates compared to other industrialized countries also make it more attractive.

The dollar is the best performing currency among the G10 currencies in January. The dollar index rose 1.6% this month, reaching a two-month high.

“The US dollar and the yen were the safe havens of choice as the virus spreads, and we expect these safe havens to continue to be well supported over the next few weeks,” said Mizuho Senior Economist Colin Asher Bank in London.

The dollar index was last at 98.04 and remained unchanged during the day but not far from Wednesday’s two-month high of 98.19.

The yen rose 0.1% to 108.90 yen per dollar (JPY =), close to the three-week high of 108.73 it had reached last week.

The Japanese currency fell 0.3% against the dollar this month, but rose against most other currencies by 1.6% against the euro and 3.9% against the Australian dollar

Otherwise, the British pound fell 0.25% to $ 1.2983 before the Bank of England made a political decision later in the day that markets are still 53% likely to see rates cut.

One of the biggest losers this month is the Aussie, which has lost 3.9% so far this month, the second worst currency in the G10, after a 4.3% decline in the Norwegian krone, which was impacted by the fall in oil prices. (Reporting by Saikat Chatterjee; Additional reporting by Hideyuki Sano in TOKYO; Editing by Alison Williams)

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