Coronavirus Infects Asian Currencies 

Forex markets in Asia on Monday slid after the rapid spread of the Covid-19 virus outside China. Fears of a global pandemic pushed investors to safe-haven assets. As a result, gold, the dollar, and the Swiss franc all benefitted.

 

Over the weekend, spikes in infection showed in South Korea, Iran, and Italy. In South Korea, there are now more than 760 cases. In Iran and Italy, there are more than 43 and 150 cases, respectively.

Currencies in China, New Zealand, and Australia were also weak. Unsurprisingly, emerging market currencies were none the better.

 

In early trade, the Australian dollar hit an 11-year low.

 

Meanwhile, the kiwi lost half a percent. However, reports said four Chinese provinces were lowering emergency restrictions. As a result, the kiwi recovered slightly.

 

Malaysia suffered from political turmoil, so the ringgit faced heavy pressure. The currency slipped 0.7% lower to its lowest since September 2019.

 

Italy has suspended the carnival of Venice, closed schools, and sealed off affected towns. However, its government hasn’t yet figured out how and where the virus’ spread started.

 

The US dollar index inched nearer a three-year peak, which it hit last week. Against the euro, the dollar was steady at $1.0820. It traded at $1.2942 against the pound.

 

The Swiss franc’s safe-haven appeal worked, pushing the currency 0.3% higher.

Another analyst commented and said a lot would depend on China’s ability to resume production quickly. At the same time, China would have to contain negative implications for supply chains and global

economic growth.

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Coronavirus Dominates the FX Market

 

In recent weeks, the coronavirus fiasco has dominated the headlines and moved the forex markets.

The World Health Organization is now worried about the growing number of Covid-19 infections without clear links to China.

 

According to one analyst, the markets had to rethink the chances of intermediate supply chain reconnection.

 

Meanwhile, the easing of restrictions in some Chinese provinces provided little support to other currencies.

 

The South Korean won shed almost 1% to a six-month low. In Indonesia, the rupiah has so far protected its independence from Chinese trade.

 

However, it still lost to a broad selloff in emerging markets, declining 1%.

Despite the rampant risk-aversion, the Japanese yen didn’t go as lucky as the others. After it recovered slightly from last week’s decline on Friday, it traded flat at 111.55 per dollar. Investors didn’t count on the yen’s safety as it is primarily exposed to the virus.

 

The coronavirus has taken the lives of more than 2,400 people in China. This figure accounts for 98% of global diagnoses.  

 

Over the weekend, however, the virus spread beyond China shocked authorities.