The dollar rises as China sticks to its strict policy to contain Covid

The dollar rose on Monday as sentiment deteriorated after China said it was sticking to its strict curbs on the coronavirus, dashing hopes of the imminent reopening of the world’s second-largest economy that earlier recorded a massive rebound in risky assets.

China said at the weekend that it would continue its strict approach to dealing with COVID-19 cases as they appeared, which gave little indication that it would relax its strategy to reach “Covid Zero” nearly three years after the outbreak of the pandemic.

The dollar rose 0.9 against the offshore Chinese yuan to hit 7,237 in early Asian trade, with the Australian and New Zealand dollars, two of the risk-sensitive currencies, among the biggest losers, both declining nearly one percent.

The Australian dollar fell 0.66 percent to $0.6427, while the New Zealand dollar fell 0.7 percent to $0.5887.

The two currencies benefited greatly from Friday’s big rally – rising nearly 3 percent as speculation that China might end its restrictions on the coronavirus gained traction and boosted risk appetite.

On the other hand, the pound sterling fell 0.42 percent to $1.1324, and the euro fell 0.3 percent to $0.9930, retreating from its nearly 2 percent rise on Friday.