Chinese turmoil boosts dollar, hits smaller currencies

By: 9 years ago

AFP FILE PHOTO

NEW YORK, United States — More evidence of the sharp slowdown in China’s huge economy Monday battered emerging currencies while giving solid boosts to the US dollar and Japan’s yen.

The sudden breakdown in relations between Gulf rivals Saudi Arabia and Iran, over Riyadh’s execution of a Tehran-supported Shiite cleric, also added to market nervousness and the flood into the greenback.

BACKSTORY: China cuts yuan to weaker than 6.5 against dollar

The dollar added 0.3 percent on the euro, to $1.0833 per euro, but slipped 0.7 percent to 119.42 yen.

The greenback surged 1.3 percent to $0.7184 per Australian dollar, the latter hit by the threat China’s continued slowdown poses for Australia’s key ore exports.

The British pound also gave up ground, to $1.4721.

Among emerging currencies, China’s yuan took another fall, losing 0.4 percent to 6.54 per dollar, a nearly four-year low.

Brazil’s real plummeted 2.0 percent to 4.05 per US dollar, its lowest level since October, amid worries that China’s weakness also spells lower demand for Brazil’s already hard-hit commodity exports.

“The proximate cause for the carnage was weaker-than-anticipated manufacturing PMI figures” for China, said Matt Weller of Forex.com in a client note.

However, he argued, “while traders remain uneasy about China, the broader outlook for emerging markets is more optimistic (or at least less pessimistic).”