Asia FX slammed by China COVID spike, Russia-Ukraine woes
2022.11.20 23:22
Asia FX slammed by China COVID spike, Russia-Ukraine woes
Budrigannews.com – The yuan hit particularly hard as China recorded a record jump in daily COVID cases, but amid concerns of a potential escalation of the Russia-Ukraine conflict,
Several Chinese cities saw a record spike in new COVID-19 cases, slipping 0.6% to a 10-day low but shedding 0.7%. However, currency losses were moderated somewhat by keeping the main lending rate >ER$3.
The rising number of infections has introduced new lockdowns in several financial hubs, including the capital Beijing and economic center Shanghai. The new measures have driven widespread concern that the country’s economic growth will once again slow to a crawl after a short recovery in the third quarter.
Data released last week showed the world’s second largest economy had already struggled in October and showed more weakness in the coming months as its anti-COVID measures tightened. It largely offset optimism over a potential rollback of China’s austere zero-COVID policy at the heart of its economic woes.
Concerns about China rattle the currencies of other countries with heavy trade exposure to Beijing. While slid 1%, shed 0.3%.
The US dollar benefited from new safe-haven demand amid concerns of a slowdown in China. And both rose about 0.3% each, clearing the 107 level and hitting 10-day highs.
Concerns about a potential nuclear crisis in the Russia-Ukraine conflict flow into the dollar that has also driven safe haven amid heavy shelling of Ukraine’s Zaporizhzhia nuclear power plant
The dollar outlook was also lifted last week by a hawkish signal from a Federal Reserve official.
Other Asian currencies retreated as sentiment worsened on fears that a US interest rate hike could trigger a recession.
It sank 0.3% and lost 0.5% with little support from the drop in oil prices.
It fell 0.4% as parliament hung up for the first time in history after a general election. But former Prime Minister Muhyddin-Yassin said he had secured enough seats to form a government.
