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IDR Lags Firmer Asia FX, China PMIs Out Tomorrow

ASIA FX

Most USD/Asia pairs are lower in the first part of Thursday trade. IDR is the exception, with weaker portfolio flows and BI rhetoric presenting headwinds today. CNH gains have been limited, while THB and won have rallied, albeit remaining within recent ranges. Tomorrow the focus will be on China official PMIs for Feb, along with South Korean trade data.

  • USD/CNH drifted sub 7.2100 amidst stronger yen levels and a better onshore equity backdrop. There has been no follow through though. We are back to 7.2115 this afternoon, only marginally stronger in CNH terms. Volatility remains low for CNH, and USD/CNY onshore has edged down from the 7.2000 level.
  • 1 month USD/KRW is lower, last near 1331, around 0.25% stronger in won terms. We remain within recent ranges though. Onshore equities are weaker after yesterday's outperformance. The firmer yen backdrop has likely helped at the margins. Tomorrow onshore markets are shut, but we still get Feb trade figures. Markets expect export growth to step down, with the LNY timing a factor.
  • USD/IDR spot has drifted higher in the first part of Thursday trade. We were last near 15730, which is around 0.30% weaker in IDR terms. The 1 month NDF is also higher, last tracking at 15745/50, which is slightly above Wednesday highs. Earlier Feb highs in the 1 month NDF rested just above 15800. Portfolio flows remain a headwind for IDR. We saw close to flat net equity flows yesterday, while bond outflows were on Tuesday. Foreign investors' holdings of local bonds have fallen since late Feb. Bi Deputy Governor Juda Agung was on the wires today stating that the economy needs a rate cut to boost growth, but the BI can't adjust rates yet, given global conditions (BBG).
  • USD/THB is back sub 36.00, the pair last near 35.92, around 0.35% stronger in THB terms. Once again we have seen selling interest in the pair above 36.00. IP growth for Jan was slightly better than expected but still contracted for the 16th straight month. Later on Jan BoP/trade figures are due.
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