Asian currencies fall as worries mount over coronavirus epidemic

The Chinese offshore yuan fell 0.2 per cent to 6.9849 per dollar, reversing Wednesday’s gains.

Asian currencies weakened on Thursday, with the Thai baht sliding to a more than seven-month low, hard hit by worries over the rapid spread of a new virus from China and its economic impact.

Mounting death toll from the novel pneumonia-like virus has prompted the World Health Organisation to reconvene a meeting later in the day to decide if the outbreak now constitutes a global emergency.

The virus has left 170 people dead and infected 7,711 so far in China, and spread to at least 15 countries, including Taiwan, South Korea, Thailand, Malaysia and Singapore.

Calling the epidemic a source of uncertainty for China’s economic outlook, the US Federal Reserve said it is likely to slow growth in the world’s second-largest economy at least in the near term.

“Past experience (during the severe acute respiratory syndrome outbreak) suggests a cumulative 3 per cent-10 per cent drop in emerging Asian forex but since 2003, reliance on, and sensitivities to, China have amplified,” Vishnu Varathan, senior economist at Mizuho Bank, said in a note.

Leading the declines among Asian currencies, the Thai baht eased up to 0.9 per cent to 31.27 per dollar, after crossing a key 31.00 per dollar barrier in the previous session.

The pace of the virus spread in China led markets to reassess the potential impact on the Thai tourism industry, Maybank analysts said.

Thailand, a popular destination for Chinese tourists, has confirmed 14 cases of the virus, more than any country outside China.

The Chinese offshore yuan fell 0.2 per cent to 6.9849 per dollar, reversing Wednesday’s gains. Onshore markets were closed on account of the extended Lunar New year holidays and will resume trading on Feb 3.

The Taiwanese dollar slid as much as 0.9 per cent, its biggest intraday decline since August 2019, as investors priced in the virus outbreak after returning from a five-day Lunar New Year break.

A central bank official told Reuters that the apex bank would keep a close watch on fluctuations in the foreign exchange market and ensure stability if there were unusual ones.

South Korea’s won faltered 0.7per cent, heading for a fourth straight session of declines.

The central bank said it was premature to say whether the potential impact from the new coronavirus should be countered with further easing.

The Indian rupee softened 0.3 per cent, while the Malaysian rinngit, the Singapore dollar and the Indonesian rupiah each lost 0.2 per cent.

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