Familiar Magnitude Of Bias In Yuan Fixing Brings Stabilisation

Improvement in risk appetite lent support to some Asia EM currencies, but PHP and MYR failed to garner any strength. The yuan fixing returned to normalcy, falling within reasonable distance from expectations.

• CNH: Spot USD/CNH was happy to hold a tight range. The PBOC set the yuan reference rate at CNY6.3569, just 14 pips above sell-side estimate, offering stabilisation after a considerably lower than expected fixing delivered yesterday.
• The main regional risk proxies KRW and IDR caught a bid in the wake of overnight greenback sales, as market sentiment picked up. Headline flow in South Korea and Indonesia offered little of real note.
• MYR: Spot USD/MYR clawed back its initial losses, as officials continued to warn against rising Covid-19 infections. Meanwhile, December data showed that Malaysia's factory output growth slowed more than expected into end-2021.
• PHP: The peso was among the worst performers in the region, losing ground for the fifth straight day. Spot USD/PHP narrowed in on key resistance from the PHP51.500 level.
• THB: The baht fared well as the planned relaxation of border rules and domestic restrictions fuelled optimism surrounding recovery prospects for the tourism industry.