Currencies, including the Australian dollar and the British pound, fell on Monday, amid fears that further restrictions may be imposed in Europe to contain the mutated Omicron from the Corona virus.
Investors shifted their focus to the potential impact of the rapid spread of the new mutation after the Netherlands imposed a general closure on Sunday, while local newspapers in Italy reported that new restrictions were being considered there as well.
“Increasing indications that emerged over the weekend regarding the crippling effect of the new Omicron variant have undermined investor sentiment toward risk,” said Lee Hardman, Mitsubishi UF currency analyst.
Hardman added: “The strict closure in the Netherlands will raise fears of the possibility of similar measures in other European countries in the coming weeks.”
The risk aversion was evident when European markets opened, but it eased slightly during the session.
The Australian dollar, which is considered an indicator of risk appetite, fell 0.2% to $0.7109, after hitting its lowest level in 13 days earlier.
The British pound fell 0.2% to 1.32105 dollars.
The decline in oil prices has also hurt the commodity-linked currencies.
The Norwegian krone fell, with the euro gaining about 0.4% against the krona.
The US dollar index settled at 96.544, close to last month’s peak of 96.938, which was its highest level since July 2020.
The euro also rose 0.3% to 1.12695 dollars, recovering relatively after falling 0.8% on Friday, after the European Central Bank took initial steps to exit the pandemic stimulus program.
China cut its key lending rate for the first time in 20 months to support its sluggish economy, sending the yuan to a 10-day low.
The Turkish lira plunged to another record low on Monday despite the central bank’s $6 billion intervention this month, after President Recep Tayyip Erdogan reiterated his support for his unconventional policy of lowering interest rates by pointing to the prohibition of usury in Islam.
Cryptocurrencies Bitcoin and Ether are headed for losses for the second day in a row. The price of Bitcoin reached about $ 45,765.67, after falling significantly from its all-time high of $ 69,000 in November.
