Coronavirus has caused a massive wave of global financial instability. Yet, for foreign exchange markets, the story is slightly different. Many emerging market currencies have depreciated sharply. But the major currency pairs, though buffeted by volatile cross-cutting forces, have traded narrowly in comparison with the 2008 financial crisis.

During the ‘great recession’, policy-makers fretted that foreign exchange markets in the major pairs (dollar/euro, dollar/yen) would become dysfunctional, similar to other asset markets, such as money market funds, commercial paper, and asset-backed securities. Aside from briefly after the collapse of Lehman Brothers, when cross-currency basis points blew out amid a scramble for dollars and counterparty credit risk concerns, foreign exchange market trading conditions limped along despite wide fluctuations, letting policy-makers fight their battles at home.

The Covid-19 outbreak has also seen a global scramble for dollar liquidity reflected in a sharp rise in cross-currency swap points, quickly countered by Federal Reserve dollar swaps. Counterparty credit concerns have not been prevalent as banks are in far better shape.

In the months prior to Lehman’s collapse, the dollar had traded around $1.60 per euro and then rose to $1.25 by mid-October 2008 – a move of 35 cents and almost 30%. This year, the euro at its widest has traded between $1.07-$1.14, or roughly 6%. Since April, it has traded narrowly, almost always between $1.08-$1.11, roughly 3%.

The yen appreciated after Lehman’s collapse, moving to ¥Y89 in January 2009 from around ¥110, an appreciation of 24%. During the coronavirus crisis, at its widest, the yen/dollar has fluctuated between ¥103-¥112 per dollar, a roughly 9% range, and in the last two months between ¥106-¥109, a 3% range.

Renminbi developments have largely followed this pattern of relative stability during the pandemic, though have become more complicated given the latest US-Chinese developments.

In past crises, China’s leaders sought currency stability. During the 1997 Asian financial crisis, China pegged the renminbi to the dollar, winning international plaudits, even as it lost competitiveness. During the 2008 financial crisis, it again pegged the renminbi from mid-2008 to mid-2010.

In recent years, the People’s Bank of China has continued to promote currency stability, while encouraging greater renminbi flexibility. It does so uneasily, keeping one eye on the Rmb/$ and the other on the trade-weighted exchange rate. This practice has continued so far through the coronavirus crisis.

In mid-January, just prior to the Wuhan lockdown, the renminbi traded at its yearly high around 6.85 per dollar. By mid-March, it had fallen to around 7.10, influenced by the lockdown, narrowed interest differentials, and global financial stresses. Through 20 May, it remained around 7.10, replicating the overall stability seen in yen and euro trading in the past two months and down 3.5% from its yearly high. Similarly, on a trade-weighted basis, the renminbi had barely moved between the lockdown and 20 May.

In the last week, renminbi depreciation resumed against the dollar, reflecting increased US-China tensions. There is renewed speculation about whether a falling renminbi is the canary in the coalmine of a looming US-China cold war.

Washington is rightly concerned about many Chinese developments, including Beijin’s treatment of Hong Kong, Chinese statism and industrial policies, President Xi Jinping’s authoritarianism, and years of questionable accounting practices for New York-listed firms.

But currency developments don’t belong on the list and the latest stories are so far fanciful.

Again, the renminbi’s latest depreciation reflects downward pressures due to heightened US-China tensions and is under 1%.

Many analysts examine the daily renminbi fixing to gauge authorities’ intentions. If the fix is much weaker than the prior day’s closing, that could be interpreted as a signal that authorities wished the renminbi to decline. However, daily fixings have been in line with, if not stronger than, market developments.

At the recent National People’s Congress, Premier Li Keqiang emphasised that China would keep a stable currency. Further, based on the 2015-16 period, China would be concerned that a sharp decline in the renminbi could trigger destabilising capital outflows. That is hardly what the authorities, as a matter of national prestige, would wish to see when the US-China rivalry is heating up.

The coronavirus has hit global financial markets hard, but in a more compressed period than 2008. Quick central bank responses, especially by the Fed, steadied worldwide financial conditions. Perhaps financial markets are being far too complacent in the face of the virus. Still, all things considered, the relative stability in major currencies over the past months is noteworthy.

Mark Sobel is US Chairman of OMFIF.