The virus is spreading beyond China. Thus, it drives investors to dollars. In coronavirus spread, Iran, Italy, and South Korea are new frontiers. The New Zealand and Australian dollar’s slide as the outbreak sparks new fears. As bonds and gold rally, the yen is left behind.
The rapid spread of the coronavirus outside China is driving fears of a pandemic. It sent investors flocking to the dollar and gold for safety.
Iran, South Korea, and Italy are posting sharp rises in infections over the weekend. Iran now has 43 cases, Italy, more than 150, and South Korea more than 760 cases.
The World Health Organization said that it is worrying about the growing number. Moreover, there is no link to the epicenter of the outbreak in China.
Ray Attrill is head of FX strategy at National Australia Bank in Sydney. He said that the omens are not particularly good today. He also added that presumption was that they would see intermediate chains of supply quickly reconnecting. Ray Attrill also thinks that the markets had to go through a period of questioning that logic.
Taiwan, Singapore, New Zealand, Australian, and Chinese currencies were all on the back foot. In early trade, the Australian dollar carved a fresh 11-year low.
Nearly 1 percent to a six-month low, the Korean won plunged.
In Malaysia, there was political turmoil. It added pressure to the ringgit and sent it 0.6% lower to its weakest since September.
The risk aversion saw stocks tumble and bonds and gold rise. It offered surprisingly little support to the yen.
Yen had a drop last week. Nevertheless, it partially recovered on Friday. As Asian investors discount their safety value owing to Japan’s virus exposure, Japanese currency traded flat at 111.55 per dollar.
Barclays analyst said in a note that the market reaction to the coronavirus is evolving.
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