Yen falls on concerns Japan close to declaring state of emergency; sterling steadies
Reuters
Published Apr 05, 2020 20:59
Updated Apr 06, 2020 04:00
By Stanley White
TOKYO (Reuters) - The yen fell on Monday after Japanese media said Prime Minister Shinzo Abe may declare a state of emergency as early as Tuesday to curb an alarming spike in coronavirus infections.
The pound trimmed losses against the dollar and euro after Britain assured Prime Minister Boris Johnson continues to lead the government after he spent the night in hospital for tests as he was still suffering symptoms of the coronavirus.
The dollar was on the back foot against the euro after data last week showed companies in the United States shed jobs at break-neck speed as the COVID-19 pandemic leads the global economy into a deep recession.
"When a head of state or government is stricken like this, it will cause concern for holders of sterling and sterling assets," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
"Coronavirus cases in Japan may not peak for another month, so the markets will think that now it's Japan's turn. A state of emergency is necessary, but this could be yen negative."
The yen
Abe will declare a state of emergency over the virus as early as Tuesday, the Yomiuri newspaper reported, as the number of infections topped 1,000 in the capital, Tokyo.
He will likely announce his plans to declare the emergency on Monday, the paper added.
Japan is to pledge to take "all steps" encompassing fiscal, monetary and tax policies to battle the deepening fallout from the virus in a stimulus package to be approved on Tuesday, a draft document reviewed by Reuters showed.
Pressure has been mounting on the government to declare a state of emergency as the pace of infections - while slow versus harder-hit countries around the world - continues to accelerate.
The pound GBP=D3 trimmed losses to trade at $1.2263. Against the euro (EURGBP=D3), it traded hands at 88.18 pence.
The currency came under pressure after Johnson was admitted to hospital in what Downing Street said was a "precautionary step" because he was showing persistent symptoms of COVID-19 10 days after testing positive for the virus.
Investors were concerned also because Britain's constitution - an unwieldy collection of sometimes ancient and contradictory precedents - offers no formal deputy or caretaker who would take over if Johnson cannot continue to lead.
The coronavirus, which emerged in China late last year, has turned into a pandemic that has infected more than a million people, killed over 68,000 and paralysed large swathes of the global economy.
In the offshore market, China's yuan CNH=D3 held steady at 7.1032 per dollar after the mainland reported 39 new coronavirus cases on Sunday, all but one of them imported, up from the 30 reported a day earlier. China's mainland markets are closed Monday for a public holiday.
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(GRAPHIC: FX volatility - https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-FOREX/0H001R8FQC8T/eikon.png)
The dollar eased slightly to $1.0812 per euro (EUR=EBS) and held steady at 0.9778 Swiss franc
U.S. President Donald Trump on Sunday expressed hope that the United States was seeing a "leveling-off" of the virus crisis in some of the nation's hot spots.
However, sentiment for the greenback remains fragile after a series of data last week showed U.S. job losses are soaring as draconian measures to curb the virus hurt consumer spending and factory activity.
Currencies of major oil producers fell on Monday as crude prices gave up some of their recent gains after Saudi Arabia and Russia postponed to Thursday a meeting about a potential pact to cut production. [O/R]
The rouble RUB=D3 opened 0.3% lower against the dollar, while the Mexican peso fell to a record low. However, the Norwegian crown
Written By: Reuters
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