SINGAPORE- The dollar hit a nine-month high against the euro and held broad gains elsewhere on Wednesday as investors have cut exposure to riskier currencies, mostly on virus concerns, while the kiwi was sent on a loop when central bank held fire on rate hikes.
The euro touched $1.1702 early in the Asia session, its lowest since November 2020, before recovering slightly to $1.1718.
The kiwi, heavily sold on Tuesday, fell further to also make a nine-month trough at $0.6868 after the Reserve Bank of New Zealand held off on raising rates amid a snap lockdown in the country over seven COVID-19 cases. However it soon recovered, climbing to $0.6933 because hikes were still on the horizon.
Sterling and the commodity-exposed Australian and Canadian dollars all hovered near recent lows against the dollar as the market mood remained cautious. The dollar index held at 93.068, just below the one-week high it hit on Tuesday.
“The dollar is being supported by the nervous risk environment,” said MohSiong Sim, currency analyst at Bank of Singpore.
“Markets are paying attention to the Delta variant and the area which is of most concern seems to be China,” he said.
“There’s a stock market that’s taken a bit of a beating recently, there’s regulatory risk and now there are COVID outbreaks in China – does this all add up to say that we should be paying a lot more attention to downside risks in China?”
China’s markets have been roiled by a wide front of reform and regulation and on Tuesday China moved to further tighten control of its tech sector, publishing detailed rules aimed at tackling unfair competition and data security.
At the same time, the highly-contagious Delta variant has found a foothold in formerly COVID-free New Zealand.
New Zealand’s central bank left interest rates unchanged at a record low of 0.25 percent owing to uncertainty around the outbreak, which the health chief thinks could run to 50 or 100 cases. — Reuters
