* Dollar slips, but cedes barely a fraction of big gains
* Pound and yen best performers
* Aussie, kiwi languish around 60 cents
* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, March 18 (Reuters) - The dollar edged down on Wednesday amid signs central bank measures were beginning to ease some of the funding squeeze, although it retained most of its whopping overnight gains on mounting fears about the fallout from the coronavirus crisis.
The pound and safe-haven yen made the best efforts at recovery, with the pound gaining 0.5% to $1.2110 and the yen up 0.5% to 107.18 per dollar.
The Australian dollar scraped back over $0.60 and the New Zealand dollar rose 0.3%, after being trampled in the dollar’s tear.
Yet all majors are well below week-ago levels as investors sell nearly everything for dollars and businesses draw down loans and hoard cash to ride out the crisis.
The world is adopting a war footing as the pandemic spreads and country after country announces draconian lockdowns. The virus has killed over 8,000 people globally, while the total number of cases is approaching 200,000, a Reuters tally shows.
“The newsflow is about as fluid as we have seen,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.
“It mirrors that of the (2008) financial crisis if not worse ... it’s very difficult to deal with this and I think FX traders don’t really know where to look at the moment.”
Wednesday’s tentative moves in the currency market reflected some early signs that massive central bank liquidity measures were beginning to service some of the demand for dollars.
The Bank of Japan on Tuesday made its biggest injection of dollar funds since 2008, offering $30.272 billion in 84-day dollar funding as part of a pledge from six big central banks to offer discount dollar credit.
As a result, the spread on dollar/yen cross currency swaps narrowed on Wednesday to around -58 basis points from 120 basis points a day ago.
Three-month euro/dollar cross-currency basis swap spreads also fell back overnight to 39 basis points from as high as 120 basis points.
The euro bobbled between flat and a little firmer at $1.1021 and against a basket of currencies the dollar was a tad weaker at 99.289.
Nevertheless, few expect the dollar demand to disappear, or for languishing export-exposed currencies to rebound far.
The Australian dollar has lost more than 14% against the greenback this year and fell below 60 cents for the first time since 2003 overnight. It last sat at $0.6019, and the kiwi stood at $0.5959.
Traders have also been watching volatility in the U.S. Treasury market to get a sense of the demand for dollars.
The yield on benchmark U.S. 10-year Treasuries soared 34 basis points overnight, the largest single-day rise since 2004 - further illustrating how massive selling is testing liquidity in even the deepest and broadest markets.
“It all stems from a shortage of US dollars,” said Gunter Seeger, senior vice president in investment-grade fixed income at New York asset manager PineBridge Investments.
“People are very, very nervous,” Seeger said.
“Everyone’s nervous about the virus, about oil prices, about their job, about everything.” (Reporting by Tom Westbrook; Editing by Sam Holmes and Himani Sarkar)