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CNH Lags, KRW & INR Outperform

ASIA FX

CNH has underperformed mixed trends elsewhere in the USD/Asia space. Disappointment around the 2023 growth target has weighed on China related asset sentiment. KRW has generally held recent gains, while INR is also still on the front foot. Overall moves haven't been large though. Tomorrow, we get Jan-Feb trade figures From China, South Korea Q4 GDP revisions, Taiwan CPI and trade figures, along with Thailand and Philippines CPI prints.

  • USD/CNH has seen selling interest emerge around the 6.9200 level. We last tracked slightly lower at 6.9160/70, 0.30% weaker in CNH terms versus Friday's close. Onshore equities are down around 0.50%, while Northbound flows have been negative (near -1.8bn yuan). The prospects of less policy stimulus has weighed on the equity space, with some disappointment around the 5% growth target for this year.
  • 1 month USD/KRW climbed in the first part of trade, but didn't get beyond 1298, we now sit back at 1293/94, only slightly below NY closing levels from Friday. The Kospi is up over 1%, with offshore investors flow positive. The NPS (Korea's National Pension Service) has stated it stands ready to revive the swap facility with BoK if needed. Feb inflation pressures were lower than expected.
  • The Rupee is mostly trading on the front foot, with USD/INR back under the 81.80 level. This follows further onshore equity gains and decent offshore equity inflow momentum. Lower US yields are also helping. The pair is sub is 100-day EMA as well.
  • USD/PHP is relatively steady. The pair last in the 54.80/85 region. We are close to multi-week lows, but haven't been able to sustain much downside. On the data front, all eyes rest on tomorrow's CPI outcome. The market looks for 8.9% y/y, (8.7% prior), while the BSP has a 8.5% to 9.3% forecast range. BSP Governor Medalla noted at the end of last week, that a breach of the 9% handle could mean a 50bps hike at the March 23 meeting.

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