KRW Loses Shine On North Korean Threat, PBOC Set USD/CNY Mid-Point At Multi-Year Low

Most USD/Asia crosses stayed in negative territory in the wake of yesterday's greenback sales, with monetary policy decisions from a couple of Southeast Asian central banks eyed today.

• CNH: Spot USD/CNH ground lower with all eyes on the PBOC. China's central bank trimmed 1-Year Loan Prime Rate by 10bp and 5-Year Loan Prime Rate by 5bp, which came after reductions to 1-Year MLF & 7-Day Reverse Repo rates earlier this week. Meanwhile, the PBOC set their USD/CNY reference rate at the lowest point since May 2018 and roughly in line with expectations, which some may have read as a sign that Chinese policymakers are comfortable with redback appreciation.
• KRW: South Korean won re-opened on a firmer footing but trimmed gains after North Korea (via its state media) delivered a veiled threat to lift the self-imposed moratorium on ICBM & nuclear weapons tests. Yonhap later reported that North Korea appears to be preparing a military parade.
• IDR: The rupiah was stable, with participants on the lookout for monetary policy decision from Bank Indonesia. The central bank is expected to keep their main policy rate unchanged, but their language will be closely watched.
• MYR: Bank Negara Malaysia are also set to deliver a monetary policy decision, and are also expected to stand pat. The ringgit garnered some strength in the lead-up to the announcement, even as FinMin Zafrul told parliament that recent flooding may cost the economy as much as $1.9bn.
• PHP: Spot USD/PHP continued to operate close to a fresh cycle high printed yesterday, slowly moving away from that level. The Philippines' daily cases remained on downward trajectory.
• THB: Spot USD/THB was clawing back initial losses, before it sold off again as Thailand's Covid-19 task force approved the easing of some restrictions and the resumption of the "Test & Go" travel programme Feb 1 for travellers of all nationalities.