Panic Buying Sees Dollar Soar Versus Emerging-Market Currencies

The greenback soared against emerging-market currencies as investors made another stampede into haven assets on fears that the coronavirus will send economies into freefall.

Losses in Asia were led by the Indonesia rupiah and Korean won, which are particularly sensitive to global growth. Both slid about 3% as the number of countries shuttering borders and imposing self-isolations soars.

Thailand’s baht and the Malaysian ringgit dropped around 1% after S&P warned the epidemic could cost the Asia-Pacific region $620B IN ECONOMIC LOSSES” class=”terminal-news-story” target=”_blank”>$620 billion in economic losses.

“In an almost synchronized run for safety most assets are being sold for the dollar,” said Eugenia Victorino, head of Asia strategy at SEB AB in Singapore. “Korea is clearly in the frontline, but Indonesian and Indian assets are also taking the brunt.”

The world’s reserve currency has surged to record highs amid a rush for cash on expectations that the coronavirus pandemic will be lengthy. The insatiable demand for dollars prompted the Federal Reserve to beef up greenback liquidity swap-line arrangements with peers from Switzerland to Japan.

“The dollar is rallying on haven demand — markets are digesting the implication of job losses, a prolonged economic downturn,” said Christopher Wong, senior foreign-exchange strategist at Malayan Banking Bhd. Currencies “prone to capital outflows and those that were people’s favorite carry trades” are vulnerable to fresh selling pressure.

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