The Chinese yuan is plunging to its lowest level of 2020 as the Wuhan coronavirus outbreak intensifies. Despite the worldâs second-largest economy showing signs of a rebound, the consensus is that China will reverse its gains and struggle to stay afloat, especially if some reports that the virus will intensify in April and May are correct.
Health authorities say that at least 81 people in China have died, and there are at least 3,000 confirmed cases. Chinaâs National Health Commission announced on Sunday that the coronavirus has the ability to strengthen and spread even further. Globally, there have been five confirmed cases in the US, two in Canada, and the number of patients tested for the strain in the United Kingdom has risen to 52.
Beijing announced that it would extend the Lunar New Year holidays to February 2 so officials can expand its prevention and control measures â they had been scheduled to end on January 30.
Wuhan Mayor Zhou Xianwang, meanwhile, is urging the federal government to do a better job of minimizing fears by conducting a âgrassrootsâ public relations initiative. Mayor Zhou warned that Communist Party rules are preventing officials from being more open with the public, exacerbating panic:
The awareness [of prevention and control] is relatively low in the countryside. We will need to fill the gap of this weak link. The most important thing now is mobilizing our cadres at the grass-roots level so we can do better in our prevention and control work at the community level.
Global financial markets are deep in the red to kick off the trading week with the leading indexes recording triple-digit losses. The Dow Jones Industrial Average shed 430 points, the Nikkei fell nearly 500 points, the DAX lost 355 points, and the Shanghai Composite Index slipped 100 points. Some of the currencies that are closely associated with the Chinese economy, such as the Australian dollar and the New Zealand dollar, are trending downward.
Investors are delving into safe-haven assets, including gold, which is up 0.65% to $1,582 an ounce.
The Cboe Volatility Index (VIX), a measurement of fear on Wall Street, surged 24.5% to 18.13.
But is the fear justified? Some experts posit that the market fluctuations could be exaggerated amid lower levels of liquidity. A handful of the major financial markets are closed for the holidays, including Australia, China, Hong Kong, and Singapore.
On the data front, China will be reporting the purchasing managersâ index (PMI) readings and industrial profits this week.
The AUD/CNY currency pair dropped 0.35% to 4.7294, from an opening of 4.7461, at 15:14 GMT on Monday. The EUR/CNY fell 0.34% to 7.6383, from an opening of 7.6383.
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