Commodity News
HeadLine : Safe-haven yen takes a hit as hopes for China stimulus grow
Date : Feb 20 2020
The Japanese yen traded near a nine-month low versus the dollar on Thursday as risk appetite improved on expectations that China will continue to take steps to offset the economic impact of the coronavirus outbreak. The Chinese yuan held steady against the dollar in offshore trade before a widely expected cut in the country's benchmark loan prime rate later on Thursday. The yen was initially bought as a safe-haven asset when the outbreak of the virus in the central Chinese province of Hubei roiled financial markets last month. However, yen buying is starting to fade as growth in the number of new cases of the virus in mainland China starts to slow. Signs that Chinese officials are ready to take more drastic measures to support companies hit by the virus is another factor that has reduced demand for safe-haven investments. The yen traded at 111.27 per dollar in Asia on Thursday, close to the lowest since May 2019. Japan's currency tumbled 1.3% on Wednesday, its biggest daily decline since August, after triggering stop loss orders following the expiry of options that had kept the yen in a narrow range versus the dollar, according to Ishizuki. The People's Bank of China is expected to cut its benchmark rate on Thursday, which would follow a cut the interest rate on its medium-term lending on Monday.

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