In This Article:
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Currencies react early to worries about China virus
* Risk aversion supports safe-haven yen
* Investors trying to measure economic impact as virus spreads
By Stanley White
TOKYO, Jan 27 (Reuters) - The yuan fell in offshore trade on Monday to its lowest level in three weeks as the death toll in China from the spread of a new coronavirus mounted, raising worries authorities are struggling to contain the outbreak and sparking a bout of risk aversion.
Japan's currency, often sought as a safe-haven in times of uncertainty, initially jumped versus the dollar to the highest since Jan. 8 before erasing some of those gains as investors gauged public health officials' response to the virus.
China's cabinet announced it will extend the Lunar New Year holidays to Feb. 2 to strengthen the prevention and control of the new coronavirus, state broadcaster CCTV reported early on Monday. The holidays had been due to end on Jan. 30.
Hong Kong has also banned the entry of visitors from China's Hubei province, where coronavirus outbreak was first reported in the city of Wuhan, underscoring the difficulty officials face during a peak travel season.
Health authorities around the world are racing to prevent a pandemic of the virus, which has infected more than 2,000 people in China and killed 80.
There are concerns that tourism and consumer spending could take a hit if the virus spreads further, which would discourage investors from taking on excessive risk.
"There is a lot of uncertainty about how much further the virus will spread, and this is behind the moves in currencies," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo.
"I thought dollar/yen would be supported at 109, but it broke through that, so now the next target is 108.50. This risk-off mood is likely to continue for a while."
In the offshore market, the yuan was under persistent pressure and slumped to 6.9776 per dollar, the weakest since Jan. 6.
The yen rose to 108.73 per dollar, its strongest level since Jan. 8, before paring gains to trade up 0.16% at 109.09.
Japan's currency also jumped more than 0.5% versus the Australian and New Zealand dollars as worries about the virus drew traders toward safe-haven currencies.
The dollar index against a basket of six major currencies was little changed at 97.881.
Traders said market moves could be exaggerated due to low liquidity, because financial markets in China, Hong Kong, Singapore, and Australia are closed for holidays.