FOREX-Dollar falls, riskier currencies rally on virus lockdown hopes

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Iain Withers
LONDON, April 7 (Reuters) - The dollar lost ground on
Tuesday as riskier currencies rebounded on tentative hopes that
lockdowns may be slowing the spread of the coronavirus in some
countries.
Bets that the world's biggest crude producers may cut supply
to support oil prices also boosted market sentiment.
The greenback - the world's reserve currency - has swung
wildly in recent weeks in volatile trading. But action by
central banks to ease a mad scramble for dollars has helped
bring some calm to markets.
The dollar was last down 0.6% versus a basket of currencies
=USD , mirroring improved risk sentiment across equity markets,
with European shares up for a second straight day. Sterling also rallied, even as traders awaited news on the
health condition of British Prime Minister Boris Johnson, who is
fighting worsening coronavirus symptoms in intensive care.
Analysts said that while news of Johnson's condition was
clearly a concern, beyond a dip in Asian hours it had not yet
moved the pound as it was unlikely to mean a change in the
government's policy direction to fight the virus. Sterling was
last up 0.7%. GBP=D3 The dollar was down 0.3% against the yen as Japanese Prime
Minister Shinzo Abe declared a state of emergency for parts of
the country on Tuesday to counter the spread of coronavirus.
JPY=EBS FROM EXAGGERATED SELLING"
The euro rose 0.7%, last trading at $1.08650. EUR=EBS
"We've got a nice decline in volatility across forex and
equity markets. We know central banks have done a very good job
in alleviating the strain in dollar markets and that's feeding
through," said Kenneth Broux, FX strategist at Societe Generale.
"We need some time for this to settle... I think what we are
seeing is a bit of reversion - a correction from exaggerating
selling. We are in that process."
Dollar borrowing costs in swap markets have retreated, with
swap rates against the euro and pound falling to their lowest
levels in more than a decade this week.
Oil also rose on Tuesday amid hope that oil producers will
agree to cut output in the face of crushed demand due to the
coronavirus pandemic. O/R
Commodities-exposed currencies including the Norwegian
crown, Australian dollar and South African rand rallied
particularly strongly, all up more than 1% on the day. NOK=
AUD=D3 ZAR=
Those currencies were battered last month when investors
dumped them for the safety of the U.S. dollar.
The Reserve Bank of Australia kept policy on hold at a
meeting overnight after it already slashed interest rates and
embarked on quantitative easing. "With evidence continuing to build that the lockdowns are
proving effective at slowing the spread of COVID-19, market
participants' focus is beginning to shift to when and how the
lockdowns could be eased," analysts at MUFG said in a note.