China's yuan reverses losses on drug discovery headlines

Feb 5 (Reuters) - China's yuan surged past 6.98 per dollar and reversed intraday losses on Wednesday afternoon on reports that a Chinese university had found a drug to treat people with the new coronavirus.

The offshore yuan strengthened 0.2%. The onshore yuan also firmed after it finished domestic trading.

Bruce Yam, forex strategist at Hong Kong brokerage Everbright Sun Hung Kai, said the move is a "knee jerk" reaction given that it will take time for the medicine to be widely used.

"Production and China's foreign exchange income will have suffered (by then)," he said. "It will not be easy to reverse the economic impact in the first quarter."

Stocks also jumped on similar reports and as researchers in the UK said they made a "significant breakthrough" in finding a vaccine. (Reporting by Noah Sin in Hong Kong and Winni Zhou in Shanghai; Editing by Andrew Heavens)