FOREX-Yen rises, yuan slumps as stocks fall on China virus

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Stock market decline pushes up yen
* Some concern about Chinese coronavirus in Wuhan
* BOJ leaves policy unchanged as expected
* Traders await more details from ECB on policy tone

By Stanley White
TOKYO, Jan 21 (Reuters) - The yen pulled ahead and the yuan
fell against the dollar on Tuesday as the spread of a
pneumonia-like virus in China sparked a sudden bout of risk
aversion and sent Asian stocks skidding.
The yuan slipped against the U.S. currency in onshore and
offshore trade after a Chinese health expert said the virus can
pass from person to person as the fourth death from the illness
was confirmed.
The outbreak of the disease, which has spread from the
central city of Wuhan, is still in its early stages. However, it
comes right before the peak travel season during the Lunar New
Year holidays, raising risks that it could spread further.
"Hong Kong stocks fell sharply at the open due to worries
about the virus, which sparked risk-off trades that pushed up
the yen and U.S. Treasuries," said Takuya Kanda, general manager
of the research department at Gaitame.com Research Institute in
Tokyo.
"So far, the number of deaths from the virus is low, so
hopefully there will not be a big panic."
The yen JPY=EBS edged 0.2% higher to 109.97 per dollar on
Tuesday.
In the onshore market, the yuan CNY=CFXS fell to 6.8973
per dollar, the lowest level in almost a week. In the offshore
market, it CNH=D3 dropped to 6.9007.
The dollar index against a basket of six major currencies
stood at 97.589, near the highest level in a month.
The yen remained higher after the Bank of Japan kept its
short-term interest rate target at minus 0.1% and its pledge to
guide 10-year government bond yields around zero. The BOJ also nudged up its growth forecasts, but traders
will scrutinise governor Haruhiko Kuroda's remarks at a press
conference later on Tuesday.
Elsewhere in currencies, the Australian dollar AUD=D3 fell
0.15% to $0.6865 as worries about the Chinese virus hurt
currencies sensitive to risk. The New Zealand dollar NZD=D3
also eased slightly to $0.6607.
The euro was locked in a narrow range before a European
Central Bank (ECB) meeting on Thursday where it is expected to
launch a comprehensive review of central bank strategy,
including the ECB's inflation target.
Against the dollar, the euro EUR=EBS traded at $1.10968
The common currency was also quoted at EURGBP=D3 85.30 pence.
The ECB's first meeting of the year is most likely to launch
a rethink of an inflation goal the bank has failed to meet since
2013.
The scope and scale of the review will be a key focus for
markets given the far-reaching implications for monetary policy.
A slightly brighter tone to data means the ECB's assessment
of the economic outlook will also be watched closely by
investors on Thursday.