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Intervention Risks Growing With YTD Lows Within Sight?

ASIA FX

The ADXY index (J.P. Morgan) is currently hovering around the 100.00 level, just a touch above YTD lows. The table below presents current spot levels for USD/Asia pairs, against YTD highs for 2023. To varying degrees pairs are within striking distance of 2023 highs. This creates the risks of intervention from the respective authorities to curb the rate of depreciation pressures.

  • There appears to be some reluctance to let USD/CNY weaken through 7.00 in the near term. yesterday's CNY fixing was comfortably on the strong side of expectations, while Bloomberg also reported exporters were offloading USDs.
  • The South Korean authorities have also been more pro-active in verbal jawboning around what they deem herding behavior in FX markets.
  • Yesterday the Indonesian authorities intervened in the FX markets. The authorities continue to view the exchange as cheap relative to fair value.
  • USD/INR has not breached above the 83.00 level either, although that is some distance from current spot levels.
  • FX intervention is unlikely to change the trend of currencies but is something to be mindful of, particularly in terms of intra-day/daily volatility.

Fig 1: USD/Asia Pairs Current Spot Versus YTD Highs

CCYSpotYTD High
CNH6.97966.9971
KRW1320.31326.65
TWD30.80830.827
SGD1.35401.3566
MYR4.52354.5317
INR81.87682.9512
PHP55.26556.125
IDR1542915638
THB35.0735.388

Source: MNI - Market News/Bloomberg

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