CNH Outperforms, RBI Surprises Keeping Rates On Hold

Most USD/Asia pairs are firmer, in line with broader USD indices tracking higher. Dollar gains haven't been large though, likely helped by a steady USD/CNH. Weaker regional equities, as global recession fears persist, are aiding USD sentiment. Tomorrow will be quieter given the start of the Easter holidays for a number of countries. Hong Kong and Singapore will be out. There is still some data out though with South Korean goods balance and current account for Feb due, while China FX reserves for Mar will also print.

• USD/CNH has largely stuck to a 6.8800/6.8900 range. The better than expected Caixin services PMI helped us test below 6.8800 but this proved to be short lived. We now sit basically unchanged at 6.8840/50, still the currency is outperforming generally strong USD trends elsewhere.
• Spot USD/KRW is higher, last near 1320. This is close to highs from earlier in the week, but we haven't breached these levels yet. Onshore equities are down over 1.2% and offshore investors are strong net sellers of local equities (-$510.4mn so far). If global recession fears intensify the won will likely fall, all else equal.
• Taiwan markets have returned today, with USD/TWD pushing back above 30.50, around +0.20% versus closing levels from the end of last week. Local equities are off by around 0.50%.
• USD/SGD is higher, back above 1.3300, along with a slight weakening in the SGD NEER. Next week's MAS meeting slated for Friday the 14th is coming into focus. On balance the market sees risks of further tightening, although it remains a close call.
• The RBI surprised the market somewhat by keeping rates on hold at 6.50%. The majority of economists expected a 25bps hike, which was also our bias. Financial stability concerns prompted the pause. USD/INR initially spiked higher, but found selling resistance above 82.00, last near 81.90/95. The move higher in local equities post the on hold call likely helping rupee sentiment.