Dollar falls against yen as traders weigh China outlook

The dollar slipped after rising in the previous session, with investors on edge at the end of the year as initial optimism over China’s reopening fizzled out.

After hitting a one-week high against the yen on Wednesday, which saw the dollar touch 134.40, the greenback hit a session low against the yen.

The dollar last fell 1.050 per cent versus the yen to 133.065. The dollar also fell against the Swiss franc to as low as 0.9208, the lowest level since March 31. It was last down 0.57 per cent at 0.923.

The euro edged higher, up 0.3 per cent to $1.064 after falling 0.27 per cent on Wednesday. Investors are weighing the impact of China’s rapid loosening of its strict COVID-19 rules with a surge in new infections.  Following China’s removal of its quarantine rule for inbound travelers from Jan. 8, the United States, Japan, India and other countries said they would require COVID tests for travelers from China. “China is one of the keys I think to 2023 and what happens to the global economy,” said Chris Gaffney, president of world markets at TIAA Bank.

“If they can bounce back from the dramatic slowdowns that we’ve seen, that helps the overall growth on the global scale, but on the other hand, it could also lead to higher energy demand and more demand means higher prices,” he said. The offshore Chinese yuan fell 0.23 per cent versus the greenback at $6.9788 per dollar.  “Many countries adopting an additional layer of testing for travelers arriving from China reflect hobbled resumption of travel amid China’s outbreak,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said. “This might also fuel fears of new strains of COVID that could once again disrupt the global recovery.”