EUR CHF Exchange Rate Down for Second Day in a Row

EUR CHF Exchange Rate Down for Second Day in a Row

04 February 2020

Euro Franc exchange rate has fell down for a second day in a row as safe-haven assets are not popular among investors who choose riskier attitude.

Safe-Haven Assets

                Investors turn away from safe-haven assets, and fell the appetite for risk again. For the second day in a row the exchange rate of both Swiss franc and Japanese yen fell down as the US dollar went up. Investors are eager to risk because the Chinese governments has taken measures to help fight coronavirus and its economic impact. This encourages investors to rather buy euro or US dollar than Swiss franc. On Tuesday in the late morning trading the dollar went up by 0.5% against the yen to 109.26 yen, whereas against the Swiss franc the USD went up by 0.3% to 0.9690 franc.

US Dollar Goes Up

                Gains in exchange rate against the Swiss franc and the Japanese yen triggered the US dollar index rise of 0.1% to 97.922. Not only investors’ eagerness to risk influences the USD exchange rate, but also situation in politics. Officials from Democratic Party blamed inconsistencies for an indefinite delay of caucus result in Iowa, meanwhile victory of Bernie Sanders or Elizabeth Warren could mean stocks’ prices are hurt, but safe haven assets could go up in prices.

Chinese Offshore Yuan Rose

                The offshore yen exchange rate rose against the dollar. USD went down by 0.3% to 6.9935. this is the results of the People’s Banks of China’s (PBOC) actions taken to fight the harm of the economic system made by coronavirus. PBOC put hundreds of billions of dollars to Chinese financial system just this week. In past two days the central bank of China injected as much as 1.7 trillion yuan via open market transactions. These measures have made investors calmer in terms of situation of economic market in times of spreading coronavirus. As more information is provided on the virus, the market is getting more stable. Last week investors were very worried about uncertainty growing due to coronavirus. Investors might have overacted a bit. China has taken all the possible measures to stabilize the market, which have worked. Coronavirus epidemic already took life of more than 400 people, whereas more than 20 thousands are infected just in China. In other 24 countries there have been noted 200 cases of the coronavirus. The first-quarter growth is expected to be highly influenced by the epidemic.

Other Currencies

                In other currencies’ news the euro slipped against the US dollar to 1.1040 dollars, by 0.1%. The Australian dollar edged by 0.5% to US 0.67825 dollars, which means it went far away from the low of more than 10 years it has touched last October, when the Reserve Bank of Australia decided not to change its cash rate of 0.75%. Sterling recovered from an almost six week low against the USD, trading at 1.3028 dollars, 0.3% higher. The British pound has been influenced by Brexit and worries of hard stance that was adopted by Prime Minister Boris Johnson on trade talks with European Union.