China’s COVID-19 Cases Keep On Rising, Asian FX May Lose Strength

In the past couple of decades, two sides have been formed when it comes to economies. One side is the United States which influences the Western part of the world while China influences the eastern part.

Therefore, if the economy of the United States takes a fall, its impact is felt across the western part of the world.

Similarly, if China faces a downtrend in its economy, it acts as a contagion for the entire eastern region.

However, if the economies of both countries stay at the bottom for too long, it could prove catastrophic for the entire world. Therefore, it is important to keep an eye on the economic condition of both countries.

Impact on the Forex Markets

Being the largest economies in the world, both countries have a tremendous amount of influence over all kinds of trading markets, especially the forex sector.

If the US economy is down, it has the tendency to drag down the entire western forex market and the same can be said for the Chinese economy.

The US Economy is Doing Well

At the moment, the US economy seems to be going in the optimistically expected direction. Whereas, the Chinese economy is going in an entirely negative direction.

For the US, it is the right decisions made by the Feds that have helped boost their economy. In turn, it has boosted the trading value of the dollar in the forex market.

Although China has been making the same decisions it is currently faced with a major natural disaster that is not letting the country perform well. As a result, the value of the Chinese yuan is weakening.

China Still Fighting COVID-19

Although the rest of the world was able to perform well against COVID-19, China seems to be struggling with getting rid of the virus.

The country is again falling into the same situation it had fallen into back in early 2020 when it all started. At that time, coronavirus hadn’t even been announced as a pandemic.

Once again, the number of COVID-19 cases has started hitting record highs in China. On November 25 alone, a total of 35,183 COVID-19 infection cases were reported in the country.

The National Health Commission reported on Saturday that out of the total reported cases, 31,709 were asymptomatic while 3,474 were symptomatic.

It is the third day in a row that such a high number of COVID-19 cases have been reported in China.

The Impact on Asian FX

As the country keeps dealing with rising COVID-19 cases, it is a matter of time, it lockdowns the entire country. This would eventually impact the Chinese economy, causing a great amount of damage to the Chinese yuan.

This is going to be catastrophic for the entire Asian continent as the currencies of all major countries in Asia would take a negative hit.