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ASIA FX: CNH & KRW Outperform, SEA FX Weakens Amidst Higher US Yields

ASIA FX
BulletEM BulletAPACEmerging Market News

In Asia FX markets, the yuan and won have outperformed stronger USD trends evident against the majors (although yen has outperformed again). In South East Asia and India, USD gains have been evident playing catch up to Friday's move. 

  • For USD/CNH we got to lows 7.3508, but sit higher now, last near 7.3560. This keeps us within recent ranges, with late 2024 highs intact near 7.3700. There have been a raft of headlines from the PBoC, which followed an FX meeting in Beijing. Keeping the yuan basically stable is still the clear aim, with FX overshoots to be avoided. The central bank also raised the cross-border macro prudential rule to 1.75 from 1.50. This allows local companies to raise more funds offshore and is designed to alleviate pressure on the yuan (by boosting the supply of offshore currencies onshore).
  • PBoC Governor Pan echoed yuan stability comments and stated the offshore yuan market would be further developed in Hong Kong. Stimulus efforts should be aimed at the consumer Pan added. Further RRR and interest rate cuts will also transpire to support the economy.
  • USD/KRW spot has been relatively steady, last near 1470, with upticks in the pair faded on moves through 1474, around Friday evening highs. USD/TWD has surged through 33.00, playing catch up with USD gains from Friday.
  • In SEA FX markets, some markets have seen larger USD losses, showing greater sensitivity to US yield shifts. IDR has lost 0.60, with USD/IDR back close to 16300, although BI rhetoric has also risen.
  • THB is down 0.60%, USD/THB up to 34.80, fresh highs since Nov last year. PHP is down 0.50% to 58.65/70, while MYR has fallen 0.30% to 4.5100.
  • USD/INR has also spiked, the pair rising through 86.00 to 86.40, fresh record highs. This is further evidence of greater FX volatility under the new central bank leadership. 
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In Asia FX markets, the yuan and won have outperformed stronger USD trends evident against the majors (although yen has outperformed again). In South East Asia and India, USD gains have been evident playing catch up to Friday's move. 

  • For USD/CNH we got to lows 7.3508, but sit higher now, last near 7.3560. This keeps us within recent ranges, with late 2024 highs intact near 7.3700. There have been a raft of headlines from the PBoC, which followed an FX meeting in Beijing. Keeping the yuan basically stable is still the clear aim, with FX overshoots to be avoided. The central bank also raised the cross-border macro prudential rule to 1.75 from 1.50. This allows local companies to raise more funds offshore and is designed to alleviate pressure on the yuan (by boosting the supply of offshore currencies onshore).
  • PBoC Governor Pan echoed yuan stability comments and stated the offshore yuan market would be further developed in Hong Kong. Stimulus efforts should be aimed at the consumer Pan added. Further RRR and interest rate cuts will also transpire to support the economy.
  • USD/KRW spot has been relatively steady, last near 1470, with upticks in the pair faded on moves through 1474, around Friday evening highs. USD/TWD has surged through 33.00, playing catch up with USD gains from Friday.
  • In SEA FX markets, some markets have seen larger USD losses, showing greater sensitivity to US yield shifts. IDR has lost 0.60, with USD/IDR back close to 16300, although BI rhetoric has also risen.
  • THB is down 0.60%, USD/THB up to 34.80, fresh highs since Nov last year. PHP is down 0.50% to 58.65/70, while MYR has fallen 0.30% to 4.5100.
  • USD/INR has also spiked, the pair rising through 86.00 to 86.40, fresh record highs. This is further evidence of greater FX volatility under the new central bank leadership.