The dollar moved broadly lower on Tuesday while Australia and New Zealand’s currencies jumped as risk appetite grew after China said it will scrap its COVID quarantine rule for inbound travellers – a major step towards easing curbs on its borders.
The New Zealand dollar surged 0.65% to $0.63115 while the Aussie gained 0.25% to $0.67485 in mostly thin trading amid the year-end holiday season. The two currencies are often used as liquid proxies for China’s yuan.
China will stop requiring inbound travellers to go into quarantine on arrival starting Jan. 8, the National Health Commission said on Monday, even as COVID cases spike. At the same time, Beijing downgraded the regulations for managing COVID cases to the less strict Category B from the top-level Category A.
“There seems to be no let-up in the pace of relaxing COVID restrictions despite the surge in COVID cases in the mainland,” said Christopher Wong, a currency strategist at OCBC. “This perhaps demonstrates Chinese policymakers’ resolve to full reopening.
“In addition, there was news of China potentially taking extraordinary measures to support growth,” Wong said.