Yuan Drops as China Locks Down Two Cities Over Virus
- The death toll of the virus outbreak rises to 17
- Millions on lockdown in two Chinese cities
- WHO postpones decision to declare international health emergency
Thursday saw the Chinese yuan drop as authorities locked down two cities at the epicenter of the coronavirus outbreak. The USD/CNY was trading at 6.9363.
The Japanese yen continued to gain on the back of ongoing concerns that the coronavirus might spread even further. This was fueled by the first case of the coronavirus appearing in the United States, in Washington state.
The yen also gained due to weak Japanese export figures, which declined YOY by 6.3% in December. This is compared to expectations of a 4.2% drop.
Coronavirus outbreak continues to escalate
The coronavirus outbreak has now infected over 630 people and caused the death of 17, as reported by Chinese authorities. However, scientists from the Imperial College London estimate the figures are much higher.
In a report on Wednesday, they stated that over approximately 4,000 people may have been infected. They pointed out, though, that this is likely due to delays in confirming and reporting the cases.
Medical professionals have compared the new coronavirus outbreak to the 2003 SARS outbreak. It took nearly two months for SARS to infect 456 people, whereas this virus spread to over 630 people in just a few weeks.
The CDC, along with other medical professionals, noted that the disease doesn’t appear to be as severe as SARS. The virus can spread through respiratory transmission, according to Reuters, and there is no vaccine against it. Some speculate it could take a year or more to develop such a vaccine.
Two large Chinese cities under lockdown
Chinese authorities have taken measures in an attempt to prevent the disease from spreading further.
In Wuhan, a city with 11 million residents, most forms of transport were shut down on Thursday. A few hours later, Huanggang, a nearby city of 7 million residents, followed suit. Authorities also shut down outgoing flights from Wuhan at 10am. Local reports said some airlines were still flying even after the deadline. Highway toll booths also closed, cutting off road access to the city.
Wuhan residents rushed to hospitals to get tested and fought over supplies in the stores. They emptied out supermarkets and queued up to get gas for their cars.
Most indoor entertainment venues, including cinemas and cafes, were also closed in Huanggang. In Beijing, major public events were canceled, including Lunar New Year celebrations. The people themselves have been taking precautions too. They wear face masks and only go where absolutely necessary.
World Health Organization postpones decision
On Wednesday, the World Health Organization held an emergency meeting. The goal was to decide whether to implement an international health emergency. However, they postponed their decision, stating they didn’t yet know enough about the virus.
The WHO is holding another meeting today and will reveal its decision at a press conference after 6pm (GMT).
Effects of the coronavirus on the economy
Besides the health implications, the coronavirus outbreak could have a significant economic impact too.
While China has been open about the situation, unlike the SARS outbreak, global shares still declined. Chinese stocks experienced the greatest decline in over 8 months. Ned Rumpeltin, European head of currency strategy at TD Securities, said, “Ultimately, the coronavirus is a slow-burning but important story for markets that is likely to last for months rather than just a few days.”
As a comparison, China saw a year-over-year decline of 45% in tourism with the SARS outbreak. The International Air Transport Association (IATA) estimated that Chine lost approximately 1% of its GDP due to the SARS outbreak.