Fed Hawkishness Undermines Asia EM FX

The spectre of aggressive Fed tightening loomed large, sapping strength from Asia EM currencies on Friday.

• CNH: Spot USD/CNH crept higher as China Securities Journal outlined the case for an RRR cut that could com to fruition in Q2, while Shanghai continued to battle its Omicron outbreak declaring more than 21,000 new Covid-19 cases.
• KRW: South Korean won retreated as participants assessed this week's barrage of hawkish Fed commentary. The prospect of aggressive Fed tightening resulted in the won being the worst performer in the region. Recall that the BoK will meet next week but its Governor-nominee is unlikely to be confirmed by then.
• IDR: Spot USD/IDR rejected resistance from Mar 24 high of IDR14,380 and pulled back, virtually erasing its initial gains. The official consumer confidence index weakened to 111.0 last month from 113.1 prior, touching a six-month low even as optimists still outnumber pessimists.
• MYR: Spot USD/MYR advanced, printing fresh weekly highs as a result.
• PHP: Spot USD/PHP crept higher even as data showed that the Philippines' trade deficit narrowed in February.
• THB: The baht faltered in tandem with most of its regional peers, even as Thai officials decided to ease Covid-19 rules for foreign visitors.
• INR: The rupee caught a bid as the Bank of India kept its benchmark policy rate unchanged at 4.0% and restored its Liquidity Adjustment Facility corridor to 50bp, while upgrading its FY23 inflation forecast.