The Australian dollar tested an 11-year low versus the greenback and the yen gained as Group of 20 officials meeting over the weekend citeddownside risks to global growth from the spread of the coronavirus.
The Aussie, seen as a proxy for global growth risks because of the nation’s ties to China’s economy, sank as much as 0.5% to 65.91 U.S. cents. On Friday, it touched 65.86 U.S. cents, the weakest since 2009. The yen advanced for a second straight day, by 0.3% to 111.33.
G-20 finance ministers and central bankers met as officials in Italy and South Korea were moving tolimit the virus’s spread in their countries, and as infections continue to mount in China and elsewhere. Investors have bid up gold and piled into U.S. Treasuries as they seek shelter from the illness’seconomic ripple effects.
“With containment measures in South Korea and Italy, the global economic impact can be expected to widen and this can only be bad news for commodity currencies” like the Aussie and the New Zealand dollar, said Jason Wong, a senior markets strategist at Bank of New Zealand in Wellington. “Further downside pressure looks inevitable.”
The yen may be reasserting itself as an investment haven to start the week. Last week, it sank to a 10-month low against the dollar as the spread of the disease added to concern about Japan’s economy, which last quarter suffered the biggest contraction since 2014.
Bank of Japan Governor Haruhiko Kuroda, speaking at the G-20, said the central bank will be“well-prepared” to act when needed to address the impact of the coronavirus on the economy.
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