- Chinese currency markets are the latest to tumble amid Wuhan virus fears.
- The weakeness comes after a period of strength for China’s currency, the yuan, after the US removed China from the currency manipulators week mid-January.
- As onshore trading in the yuan closes for the next week, markets fear travel related to Lunar New Year celebrations could heighten transmission of the illness.
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China’s currency tumbled in offshore trading Friday, leaving the yuan weakened at the end of a week that started out on a high. The offshore yuan fell to trade at 6.9388 yuan per $US1, a nearly 1% decline on the week, as fears about the impact the Wuhan virus could have on the Chinese economy gripped the market. The decline contrasts with the way the yuan started out the week, when it was trading offshore at a strength against the dollar not seen in months. That rally came after the US annnounced January 13 it would remove China from its currency manipulator list,The Wall Street Journal reported. Now, the market has turned its eyes to the threat the Wuhan virus poses to China: Investors fear that the coronavirus, which has already infected around 900 people and killed 26, could have a similar impact on China’s economy as the SARS virus in 2003. China has locked down cities and limited public transportation in an effort to limit the spread of the disease. But this weekend, hundreds of millions will travel around the country to celebrate the Lunar New Year, a mass-movement that analysts fear could cause the disesase to spread faster. “Transportation links and travel intensity within China have increased significantly” since SARS, Goldman Sachs analyst Andrew Tilton wrote in a January 22 note, adding this could worsen the spread of coronavirus. But China’s health infrastructure is better equipped to combat the outbreak now than in 2003, he said. Trading in the onshore yuan will be closed for a week as the country celebrates the New Year. In the last day before that break, the onshore yuan fell Friday, only partially paring losses before market close.
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