The yuan has had its worst day since March 25. Sterling is returning its gains. Nevertheless, the Euro is relatively stable. The United States President, Donald Trump, accused China of mishandling the outbreak of the novel coronavirus. He threatened new tariffs in Beijing. Thus, a day after on Friday, the Chinese yuan fell to a one-month low against the dollar.
Moreover, on Thursday, Trump said that the virus might have originated in Wuhan in a virology lab. Wuhan is a Chinese city where the outbreak began. Nevertheless, the Chinese state-backed Institute of Virology in Wuhan dismissed the allegations. Moreover, other officials of the United States have downplayed their likelihood.
The Chinese yuan fell in the offshore market by 0.7% to 7.1350 against the United States dollar, its lowest since April 2nd. Thus, on Friday, the yuan fell to its lowest since March 25. Derek Halpenny is head of research at MUFG. He said that given the scale of the impact of COVID-19, there is an exceedingly high risk of geopolitical tensions escalating considerably due to lockdowns reversing.
Dollar and Others
Halpenny added that this would clearly be another hit to global trade that will add a layer of support to the dollar going forward. The Australian dollar is another metric of market distress. Thus, it fell by more than 1% to 0.6438 since Tuesday its weakest. Moreover, against the greenback, the Canadian dollar also fell by 0.5% to 1.4016. Analysts are attributing the moves to poor equity performance in the United States.
Marshal Gittler is a forex analyst at broker BDSwiss. He said that the late-day fall in the S&P 500 diminished the gains of the market for the month. Moreover, it turned April into the best month since January 1987. Against the United States dollar, the Euro stabilized. The day before, the Euro rallied against the dollar to a two-week high on month-end flows.
