The dollar held gains against the safe-haven yen on Wednesday as China’s response to the coronavirus outbreak raised hopes it could be contained, even as the death toll rose sharply.

The mainland China toll rose by a new daily record of 65 to 490. The number of infections there hit 24,324.

Yet with more than 99% of confirmed cases confined to China, drastic quarantine measures in place and the central bank pouring trillions of yuan into the financial system, investors have partially unwound their recent flight to safety.

The yen had tumbled with gold, bonds and other safe-havens overnight in its worst session in six months. The Japanese currency nursed losses on Wednesday - last trading near a week-low at 109.45 yen per dollar.

The Australian dollar bounced from a four-month trough of $0.6679 to $0.6737, with hawkish comments from the central bank chief offering extra support.

The greenback firmed against the euro and pound.

A slightly weaker yuan and a collapse in the Singapore dollar, after hints at virus-driven policy easing, show that an abundance of caution remains, however.

Singapore’s central bank said on Wednesday that there is room for it to ease policy as the virus weighs on growth, sending the Sing dollar down about 0.8%, its steepest slide in two years.

It last traded at 1.3810 per greenback, its weakest since October.

“It’s liquid trading ability means that markets may be expressing a lot of regional views via the Sing dollar,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore.

“It’s actually a good barometer for us, to let us know that risks are not in the rear-view mirror. We are probably at the traffic-light junction.”

China’s yuan, another barometer of investors’ view of the outbreak, also turned negative - weakening back past the symbolic 7-per-dollar mark to 7.0058.

One of the reasons the virus has caused so much alarm is that much remains unknown about it, including the mortality rate and transmission routes. The severity of its economic impact, on the other hand, is becoming increasingly obvious.

As people stay home, shops shut and factories lie idle in China, the effect has begun to ripple across the globe.

Hong Kong’s Cathay Pacific Airways Ltd said on Tuesday it will cut around 30% of its capacity over the next two months. Hyundai Motor will suspend production in South Korea because of disruption to the supply of parts.

Economists are estimating a hit of between 0.2 to 0.3 percentage points to global growth.

“The economic shocks to mainland China brought by the coronavirus are likely to be 2 to 3 times larger than the SARS debacle in 2003,” said DBS economist Chris Leung, referring to a previous epidemic that cut roughly a percentage point from GDP.

“The deepening of physical interconnectivity both within and outside China ever since has increased substantially.”

Source: Reuters