Yen supported, yuan frail on coronavirus concerns

Wednesday,   22-Jan-2020   08:58 AM (IST)

The yen was supported while the yuan was on the back foot on Wednesday as investors tried to assess the risk of the outbreak of a new coronavirus in China disrupting the country's economy and trade partners. The virus, which causes a type of pneumonia, has spread to cities including Beijing and Shanghai as the number of patients in China more than tripled. More cases were also reported outside China, including the United States. Against the yen, the U.S. dollar slipped to 109.86 yen from Tuesday's high of 110.23. The offshore yuan lost 0.6% on Tuesday, its biggest fall in more than a month, and last stood at 6.9100 yuan per dollar. The Australian dollar, often used as a proxy bet on the Chinese economy, fetched $0.6844 , near its lowest levels in 10 weeks. News of the coronavirus evoked memories of the 2002/03 outbreak of Severe Acute Respiratory Syndrome (SARS), which killed nearly 800 people globally and led to a sharp downturn in tourism in Asia. The euro stood at $1.1083, after dipping slightly on Monday. Sterling traded at $1.3050 , having gained a tad on Tuesday after data showed the British economy created jobs at its strongest rate in nearly a year in the three months to November. The strong data slightly dented expectations of an interest rate cut by the Bank of England at the end of this month, though markets are still pricing in about a 60% chance of a 0.25 percentage point cut.