CNH Steady Despite Further Equity Weakness, KRW & TWD Rise Marginally

USD/Asia pairs have had a quieter session today, with some modest selling interest emerging in the USD/Asia NDF space. Overall moves have been fairly modest though. Regional equity market sentiment has been mixed, with China markets under pressure but with little spill over to CNH at this stage. KRW and TWD have firmed marginally post a step up in official rhetoric. Tomorrow, Malaysia trade figures are due, along with Philippines BoP figures.

• CNH hasn't responded to fresh multi year lows in China equity indices. The Shanghai composite off more than 2% to sub 2800, back to early 2020 levels. To be sure, the move looks more flow/technically driven, rather than a decline in fundamentals, but market disappoint around lack of fresh stimulus is likely still in play. For USD/CNH we sit under 7.2200 in latest dealings, little changed for the session.
• 1 month USD/KRW drifted sub 1340, hitting lows of 1337.2, but we sit back at 1341 now. Onshore equities are back close to flat, largely reversing earlier modest gains. Officials have warned around the pace of won falls though, so a sharp break above 1350 in the pair may be difficult to achieve in the near term.
• USD/TWD has seen a similar backdrop, post official calls for calm around the FX and local equity backdrops. Spot USD/TWD is back under 31.60, the 1 month NDF down through 31.50. We are still within striking distance of recent highs, while yesterday saw the largest equity outflow since March 2022.
• Spot USD/INR sits close to recent highs, last near 83.15. We have recovered strongly from recent lows at 82.77, with the simple 200-day MA still intact (82.73). The INR's low vol and carry still leave it appealing against low yields (per Barclays). A slightly weaker onshore equity tone is likely weighing at the margins on rupee today.
• Other pairs are mostly lower in USD/Asia terms. The exception being USD/THB. Dips in the pair have been supported and we sit near 35.64 in recent dealings. Onshore Thailand equities aren't too from mid Dec lows, while offshore investors have been net sellers of local equities in 2024 to date, with a chunky $161.3mn in outflows yesterday.