Monday has turned out to be a troublesome day for the majority of the Asian currencies. The report suggests that the majority of the Asian currencies experienced declines due to the Chinese COVID situation.
COVID Cases are on the Rise
The reason behind the general downtrend of the Asian market is because of the Chinese COVID cases. In recent days, a huge spike has been recorded in COVID cases in China.
The daily volume of COVID cases is alarmingly high and has raised many concerns throughout the country.
The matter is concerning even for the rest of the world as the situation is not coming under control in China.
Once again, China is enforcing strict curfews and lockdowns in the country to put a stop to the spread of the coronavirus. As the situation worsens, the Asian market would continue facing its negative impact.
The USD is Benefiting
While the Asian markets are taking a hit, the US dollar seems to be benefiting from the entire situation. However, the Chinese COVID situation is not the only thing that the USD is benefitting from.
The USD is also taking full advantage of the ongoing conflict between Russia and Ukraine. In recent days, the conflict between both countries has grown fiercer and the situation seems to be out of control.
During these major conflicts, it is the USD that the investors are finding to be a safe haven to save their investments. Therefore, they are investing in the dollar, which is boosting its price against other currencies.
Price Action of the Chinese Yuan
In the recent trading session, the trading price of the yuan has experienced a major dip. The value of the yuan has taken a 0.6% dip, plunging to a 10-day low.
On the other hand, the value of the international yuan has experienced a 0.7% dip. This is because of the rise in COVID case reports from all over the country.
Multiple countries in China are reporting a spike in COVID cases, which is very alarming for the country.
If the situation worsens, the country will need to lock itself out from the rest of the world. It would cause another major crash in the global economy due to the import/export dips.
For now, the People’s Bank of China is trying its best to lower the pressure from the Chinese yuan. It is trying its best to maintain the key lending rates that have helped the yuan sustain against the negative pressure.
Prices of Other Asian Currencies
In the latest trading session, the value of the South Korean won dipped by 1%. The value of the Australian dollar has recorded a 0.3% dip.
The value of the Indian rupee has sunk by 0.3% while the Thai baht has also recorded a 0.5% dip.