Asian currencies shrug off coronavirus fears
The threat of the coronavirus is failing to have a significant effect on currency volatility with implied volatility in Asian currencies having fallen last week.
According to State Street Global Markets (SSGM), implied Asian currencies’ volatility slipped below its 2019 median last week.
This was despite weakness in Asian equity markets caused by the coronavirus fears, which had so far killed over a thousand people.
On 14 February, China revealed there had been a spike in cases due to a change in how cases were calculated and added 5,090 to its total number of cases, bringing the global total to over 64,000.
Tim Graf, SSGM’s head of macro strategy for EMEA, said: “Despite weakness in equities following a surge in reported cases of the coronavirus, implied volatility in Asian currencies has actually fallen since the start of last week.
“Questions have been asked around the dataset of coronavirus cases reported since news of the virus first emerged, so large revisions are perhaps not so surprising considering this scepticism.
“So long as the jump in cases and deaths represent a one-off level shift and daily growth in cases and fatalities resume their declines, markets will likely look elsewhere for cues.”
Source: SSGM
AUTHOR
Laura Dew
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