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FOREX-Asian currencies arrest slide as WHO confident in virus response

Published 31/01/2020, 02:40
Updated 31/01/2020, 02:45
© Reuters.  FOREX-Asian currencies arrest slide as WHO confident in virus response

* Virus spreading, but WHO supports China's response

* China services data helps offset concerns of economic

slowdown

* Aussie halts slide, but set for worst month in almost 4

years

* Authorities investigate pound jump ahead of BOE decision

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook

SINGAPORE, Jan 31 (Reuters) - Asian currencies arrested

their slide on Friday as confidence from the World Health

Organization in China's response to a new virus and upbeat data

from the world's second biggest economy tempered worries over a

jump in new infections.

The WHO said late Thursday the outbreak was a global

emergency, but China's response so far will "reverse the tide"

of the virus' spread.

Together with official data showing Chinese services

activity picking up this month, that was enough to pause selling

from investors who are waiting for more information about the

virus to judge its likely human and economic costs.

The death toll in China has now reached 213 and the number

of cases is 9,692 - up from 7,711 a day ago.

The Australian and New Zealand dollars, which dipped on the

news of rising deaths, recovered after the services data to hold

steady. China's yuan CNH= was little moved at 6.9793 per

dollar.

The Antipodean currencies have been pounded in recent weeks

as investors pour out of assets exposed to the virus' fallout in

China.

The Aussie is 4.1% weaker this month and, if the selldown

does not reverse, is headed for its worst month since May 2016.

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"Aussie and kiwi are what I've called the whipping boys, if

you like, for expressing concern about the spreading of the

virus and its potential global economic ramifications," said Ray

Attrill, Head of FX Strategy at National Australia Bank.

Some 60 million people in the epicentre of the outbreak,

Hubei province, are living under virtual lockdown. Several

global airlines have stopped flying to mainland China and

economists are slashing their forecasts for Chinese growth.

The yen and dollar have been beneficiaries of the resulting

flight to safety.

The yen JPY=EBS was steady at 109.00 per dollar and the

greenback stable at $1.1030 per euro EUR=EBS in morning trade.

Against the Australian dollar, the yen has added 3.2% in the

10 days since concerns about the virus began roiling markets

AUDJPY= . Against the Korean won, the yen has gained nearly 4%

KRWJPY=R .

In Thailand - heavily exposed to Chinese tourism - the

baht, which has stubbornly resisted months of jawboning and

policy easing from the central bank, has shed 4% for the month.

"The problem for markets is the inability to price risk

because lack of certainty around this," said Chris Weston, Head

of Research at Melbourne brokerage Pepperstone.

"We're probably going to hear a much clearer definition

about how this is contained somewhere between the 3rd and 8th of

February."

Separately, relief the Bank of England held rates steady

sent the British pound GBP= up 0.7% to a week high. Britain's

market watchdog, however, is investigating the move because it

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began just before the bank's announcement.

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