FOREX-Dollar stabilises after Fed cut, yen gains as traders seek safety

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Tracking the coronavirus: https://tmsnrt.rs/3aIRuz7
* Dollar falls, then stabilises after Fed rate cut
* Central banks rushing to restore confidence in markets
* But investors fret over economic hit from coronavirus

By Tommy Wilkes
LONDON, March 16 (Reuters) - The dollar stabilised after an
initial fall on Monday following a surprise U.S. Federal Reserve
rate cut, while traders sought safety in the Japanese yen
despite efforts by major central banks to relieve a dollar
shortage and provide extra liquidity.
Pressure has been building on central banks to take action
to restore calm to financial markets roiled by the deepening
coronavirus crisis.
The Fed cut U.S. interest rates to a target range of 0% to
0.25% on Sunday and said it would expand its balance sheet by at
least $700 billion in the coming weeks. The Bank of Japan said at an emergency meeting it would buy
more corporate bonds, commercial debt and set up a new corporate
lending scheme, joining the stepped up global response. New
Zealand's central bank also slashed rates in an emergency move
on Sunday.
The coronavirus has spread from China to dozens of countries
and claimed more than 5,800 lives. It was another volatile start to the trading week, with
equity markets falling and currencies that have been hit hard by
risk aversion such as the Russian rouble, Mexican peso and
Norwegian crown suffering further drops.
The dollar, measured against a basket of currencies, was
last up 0.1% at 97.938 =USD , way off the day's highs.
The greenback had been falling as investors dumped the
dollar because of collapsing Treasury yields, but the U.S.
currency has been in demand for the last week as panicked
investors stock up on the world's most liquid currency.
"For the dollar, we think the new QE (quantitative easing)
scheme will ultimately bring the dollar lower. The
exceptionalism of U.S. growth and rates is gone and QE is a
policy to weaken the dollar," ING analysts said in a note.
"The timing of the dollar sell-off remains uncertain given
the opaque nature of the financial plumbing system," they added.
Investors piled into the yen, reversing some of last week's
drop. The dollar dropped 1.5% 106.43 yen JPY=EBS .
The euro jumped 0.5% to $1.1175 EUR=EBS .
Currencies deemed riskier or more vulnerable to a drying up
of international capital flows due to large current account
deficits weakened. Sterling sank to as low as $1.2250 GBP=D3 ,
its weakest since October.
Sunday's U.S. rate cut was probably aimed at staving off
what had the potential to be another volatile week in financial
markets, analysts said. But U.S. stock futures still plunged,
showing investors remain nervous. L4N2B80YP

CHINA, AUSTRALIA AND NEW ZEALAND MOVES
The People's Bank of China injected 100 billion yuan
($14.28 billion) into financial institutions on Monday.
The move came minutes before data showed China's retail
sales, industrial output, and fixed-asset investment all tumbled
in January and February.
The data reveal the scale of damage caused by the
coronavirus, and will heighten concerns the global economy is
headed into a recession.
The offshore yuan was last up 0.2% at 7.016 yuan per dollar
CNH=EBS .
The Reserve Bank of New Zealand cut rates by 75 basis points
to a record 0.25%, while the Reserve Bank of Australia added
A$5.9 billion ($3.63 billion) to the banking system through
market repo operations. The New Zealand dollar NZD=D3 declined 0.7% to $0.6011,
while the Australian dollar AUD=D3 fell 0.6% o $0.6147.

($1 = 1.6271 Australian dollars)
($1 = 7.0051 Chinese yuan renminbi)