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Aussie slides with yuan after weak China data, yen soars

Wednesday,   31-May-2023   01:42 PM (IST)

The Australian and New Zealand dollars declined along with the yuan on Wednesday after a surprise deterioration in Chinese factory activity stoked worries about the country's sputtering post-pandemic recovery. Traditional safe-haven currencies the dollar and yen outperformed the euro and sterling. The yen received additional support after Japan's top currency diplomat warned on Tuesday that officials were watching the currency closely following its slide to a six-month low, which has raised the spectre of intervention. Meanwhile, the Turkish lira hit a record low after President Tayyip Erdogan won an election runoff to extend his rule into a third decade. The Australian dollar endured a rollercoaster ride after heated local inflation data and disappointing Chinese purchasing manager surveys were released simultaneously. The Aussie initially jumped as much as 0.33% amid escalating odds for more central bank tightening, only to flip moments later to a 0.38% decline on escalating worries of a China slowdown. That later deepened to a 0.46% decline, taking it to the lowest since Nov. 10 at $0.6486. The New Zealand dollar sank as much as 0.78% to a 6-1/2-month trough at $0.5996. The Chinese yuan slumped to a six-month low in offshore trading, sinking as much as 0.43% to 7.0218 per dollar. The U.S. dollar index - which measures the greenback against six major peers - rose 0.28% to 104.34. The euro - which is the most heavily weighted currency in the index - declined 0.41% to $1.06910. The dollar dropped further from a six-month high against the yen reached Tuesday, when Japan's top currency diplomat said following a meeting of the country's finance ministry, central bank and financial watchdog that officials "will closely watch currency market moves and respond appropriately as needed." It fell 0.26% to 139.41 yen, extending a 0.46% slide on Tuesday. The dollar hit a peak of 140.93 earlier that day, its highest since Nov. 23. Elsewhere, the Turkish lira sank as much as 1.21% to reach a record low of 20.67 per dollar.