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Chinese yuan drops to one-week low after virus outbreak

Chinese yuan drops to one week low after virus outbreak

Both Chinese onshore and offshore yuan dropped from a six-month peak versus the U.S. dollar on Tuesday as the outbreak of a pneumonia-like virus in China boosted safety demand.

The USDCNH, or the offshore yuan, climbed 0.56 percent to a one-week high of 6.9055 after hitting a low of 6.8458, which is the lowest since June last year.

The onshore also traded higher at 6.9018, up 0.52 percent from the previous session’s closing at 6.8668, noting that it opened on an upside gap.

Chinese health expert warned that the virus can be transmitted from human to human, where four deaths from the illness were reported.

The spread of the disease came directly after the high travel season during the Lunar New Year, elevating the risk it could have wider spread.

Meanwhile, safe havens have the upper hand in the market, most notably the Japanese yen and gold, which rose for a third straight session.

Oppositely, Asian stocks plummeted, where the Chinese CSI 300 skidded 1.71 percent to finish at 4,114.31 and Hong Kong Hang Seng slumped 2.66 percent to 28,028.59.

The dollar index, which tracks the performance of the green currency versus a basket of major currencies, dropped slightly to 97.33 after the return of US investors following yesterday’s Martin Luther King holiday.

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