Risk Aversion Spoils Appetite For Asia EM FX

Asia EM currencies struggled for any topside momentum as China's worsening Covid-19 outbreak and the prospect of aggressive tightening action from the Fed came to the fore.

• CNH: Spot USD/CNH shot higher in the wake of the PBOC fix, lodging fresh one-year highs. The People's Bank set its central USD/CNY mid-point virtually in line with average sell-side estimate, reverting to neutrality after appreciation bias (~50 pip deviation) displayed in Friday's fixing. The pairs implied volatilities soared across the maturity curve.
• KRW: Spot USD/KRW climbed to levels not seen since the beginning of the Covid-19 pandemic, prompting local FX authorities to issue a warning on won depreciation. An official told reporters that South Korea is "closely monitoring" currency markets.
• IDR: Spot USD/IDR opened sharply higher in response to a temporary ban on crude palm oil exports announced by President Widodo after hours Friday. Note that Indonesia is the world's top producer of the edible oil.
• MYR: Spot USD/MYR extended its recent surge and peaked within touching distance from the MYR4.3500 mark. Last Friday saw BNM Gov signal patience on tightening policy, while over the weekend Malaysia's finance ministry noted that ringgit depreciation will be cushioned by the nation's strong external position and robust fundamentals.
• PHP: Philippine headline flow was thin, with broader regional trend driving spot USD/PHP towards key resistance from PHP52.500.
• THB: Spot USD/THB had a look above THB34.000 for the first time since 2017, as an ascending bull triangle pattern is materialising on the daily chart.