CNH Shrugs Off Ratings Outlook Shift, BoT Decision Still To Come

The USD is seeing a slightly softer tone against Asian currencies, although overall moves have been modest. TWD and KRW have outperformed, although for the won this has been in the 1 month NDF space (with onshore markets shut). CNH hasn't been impacted by the Fitch ratings outlook downgrade. THB is slightly firmer ahead of the upcoming BoT decision, while details of the digital wallet scheme have been released. Tomorrow the focus will rest on China's CPI and PPI prints.

• USD/CNH has largely tracked close to the 7.2400 level, little changed for the session. Spot USD/CNY is a little lower last near 7.2300. Fitch downgraded the ratings outlook for China, citing the steady rise in debt levels. The announcement hasn't impacted the yuan, while local equities remain in the red, although we were already down prior to the ratings headlines crossing.
• 1 month USD/KRW is down around 0.30%, last near 1346.5. Onshore markets are closed today for general assembly elections. We don't expect the election outcomes will have a large impact on market sentiment, although Yoon's policy agenda may be impacted. KRW has likely been aided at the margin by better HK tech equity trends (local markets in Seoul have been closed due to the election).
• USD/TWD has weakened in the first part of Wednesday trade. Spot is back to 32.00, a TWD gain of around 0.35% so far (earlier lows were around 31.95). Recent highs in the pair rest at 32.12. Over the past month we have risen from the low 31.40 region, with dips supported. The 20-day EMA sits back near 31.89. Today's pull back may reflect some position squaring ahead of the upcoming US CPI release (per BBG). Yesterday net equity inflows from offshore investors were quite strong, +$551mn, although April to date is still running at a negative in terms of this investor segment. Coming up later we have March trade figures. The market looks for an improved trend to 7.5% for export growth.
• For the baht, focus will rest on the upcoming BoT decision. No change is expected by the consensus although the prior meeting did see some BoT board members calling for a cut, hence some sell-side names see risks of a cut at today's policy meeting. USD/THB was last near 36.315, slightly lower for the session. Details of the government's digital wallet scheme have been filtering out this afternoon. PM Srettha believes the scheme, which will be rolled out in Q4 of this year, will boost growth by 1.2% to 1.6%. The MOF believes the scheme will also help the economy grow by nearly 5% in 2025. Note recent growth outcomes have been around the 2% level.