KRW Leads Losses As Fed Tightening Looms Large, CNH Dips Despite Firmer PBOC Fix

Unfavourable risk backdrop kept demand for Asia EM currencies at bay. Fed Chair Powell said Thursday that a 50bp rate hike is on the table for the May FOMC meeting, as the hawkish Fed drumbeat kept growing louder.

• CNH: Offshore yuan extended its sharp sell-off despite a pushback from the PBOC, who set the mid-point of permitted USD/CNY trading range ~50 pips below expectations. Spot USD/CNH briefly showed above the CNH6.5000 mark and is heading for its strongest week since August 2019, with 1-month implied volatility touching best levels since Jan 2021. The PBOC's promises of more support for SMEs had no effect on the redback.
• KRW: The won went offered amid firmer U.S. Tsy yields. Spot USD/KRW punched through key resistance from Mar 15 high of KRW1,244.00 before backing off its fresh cycle high at KRW1,245.05.
• IDR: Spot USD/IDR was northbound but held a familiar range. Bank Indonesia Snr Dep Gov Damayanti said that the central bank could further increase the RRR to curb inflation if needed, signalling caution about any imminent hike to the benchmark policy rate.
• MYR: Spot USD/MYR soared through the psychologically significant MYR4.3000 level, with its RSI creeping further into overbought territory. The ringgit ignored Malaysia's CPI data, which showed that inflation stayed at +2.2% Y/Y in March (BBG median estimate: +2.3%).
• PHP: Spot USD/PHP continued to oscillate within touching distance from the PHP52.500 figure, which has kept a lid on gains over the past few days. BSP minutes released Thursday showed that policymakers expect 2022 GDP growth to be slower than forecast before, without giving specific numbers.
• THB: Spot USD/THB rallied to fresh YtD highs, which draws attention to the approaching THB33.990 resistance. BoT Gov Sethaput argued that inflation expectations remain anchored, while FinMin Arkhom said that the government will now focus on maintaining financial and fiscal discipline.