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Asia EM FX Under Pressure, Firmer Than Expected PBOC Fix Ignored

ASIA FX

USD/Asia crosses traded on a firmer footing as onshore markets across the region reacted to the overnight risk-off impulse. The PBOC continued to lean against redback weakness via its yuan fixing, but to no avail.

  • CNH: Spot USD/CNH shot higher, piercing the CNH6.70 mark for the first time since Nov 2020. Offshore yuan was unfazed by the fact that the PBOC set the USD/CNY reference rate 47 pips below the sell-side estimate, displaying appreciation bias for the fourth time in a row. Worth noting that during Thursday's meeting of Politburo Standing Committee, China's top brass reaffirmed their adherence to Covid-Zero strategy and warned critics against questioning harsh disease-fighting methods.
  • KRW: Spot USD/KRW rallied to a fresh cycle high as trading in South Korea resumed after a public holiday. Vice FinMin Lee warned that officials are monitoring markets and stand ready to take stabilisation steps if needed.
  • MYR: Spot USD/MYR turned bid, printing its best levels in more than two years, after resistance from Apr 28 high of MYR4.3687 gave way.
  • PHP: Spot USD/PHP remained within touching distance from key PHP52.500 resistance level. Local data releases provided no meaningful impetus, amid continued tightening in the labour market coupled with a larger than expected deepening in monthly trade deficit. Reminder that on Monday Philippine voters will cast their ballots in national and local elections.
  • THB: The baht went offered, albeit USD/THB failed to attack recent cycle highs. PM Prayuth was scheduled to chair a meeting of the nation's energy policy committee, which could see officials discuss the recently lifted diesel price cap.
  • INR: The rupee lost ground in line with regional trend. Participants assessed a BBG source report released after hours Thursday, which noted that the Reserve Bank of India "may extend interest-rate hikes amid worries inflation would exceed its mandated target (...), although a three-quarter point increase is unlikely in the June meeting."
  • Financial markets in Indonesia remained closed for holidays.

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