Baht Slumps As PM Srettha Pushes Rate Cuts

Most USD/Asia pairs are higher, although baht is clearly the weakest link in Asia FX today. This follows calls by PM Srettha that the central bank could consider cutting rates. USD/CNH has firmed on the back of further equity losses. Trends elsewhere are mixed. Tomorrow, South Korean Nov current account figures are due. Taiwan trade figures for Dec are out later.

• USD/CNH dips sub 7.1600 were supported in early trade as USD sentiment softened. As HK/China equity losses grew USD/CNH found more support. We probed above 7.1700 (high of 7.1734), but have found selling interest around this level. Note the simple 200-day MA is close by near 7.1715.
• 1 month USD/KRW has been supported on dips, last in the 1314/15 region. We remain within recent ranges, with post NFP highs near 1320. Onshore equities have been weighed by negative spill over from China moves.
• USD/THB has surged back to 35.00, down nearly 1% for the session so far. PM Srettha stated that with inflation low the Thailand central bank could consider rate cuts. He added that he will seek to meet with the Governor of the BoT. Given the low starting point for the policy rate (2.50%) an early pivot to easing policy may weigh on the THB.
• We saw similar rhetoric from the Philippines Finance Chief who also sits on the BSP board. Diokno stated rates could be cut by 100bps this year, although such a move is data dependent. There hasn't been much fall out for PHP. USD/PHP sits slightly higher, last near 55.60. Unlike Thailand, its policy rate sits much higher (6.50%), so at least we have a higher starting point.
• Trends elsewhere were relatively muted.