Chinese turmoil boosts US dollar, hits smaller currencies
[NEW YORK] 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 Shi'ite cleric, also added to market nervousness and the flood into the greenback.
The dollar added 0.3 per cent on the euro, to US$1.0833 per euro, but slipped 0.7 per cent to 119.42 yen.
The greenback surged 1.3 per cent to US$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 US$1.4721.
Among emerging currencies, China's yuan took another fall, losing 0.4 per cent to 6.54 per dollar, a nearly four-year low.
Brazil's real plummeted 2.0 per cent 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)."
AFP
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