Weakens On Lower Equities, Won Back to 2009 Lows

All USD/Asia pairs are higher, as risk-off grips equities. Dovish rhetoric from regional central banks is also weighing.

• CNH: USD/CNH has climbed above 6.7200, although some selling interest is evident above this level. Earlier, the CNY fix came in weaker than expected, in line with the sharp bounce in USD/JPY overnight. China equities are lower, but have outperformed other major bourses in the region.
• KRW: USD/KRW got close to 1298, fresh highs going back to 2009. Korean equities continue to weaken, while equity outflows persist, although we are still above previous trough points. We remain wary of official rhetoric around FX weakness, although the fundamental backdrop for the won suggests it remains a tough battle to turnaround this trend.
• INR: Spot USD/INR is pushing higher, back close to 78.20, but we remain sub previous record highs of 78.27/28. The 1 month NDF is unchanged though at 78.37. Some relief for INR, at least on a relative value basis, may be coming through from the sharp drop in oil prices.
• IDR: Renewed aversion to risk coupled with dovish BI talk have allowed spot USD/IDR to rip through recent cycle highs and run as high as to IDR14,863, its highest point since Oct 2020. BI Governor Warjiyo pushed back against hawkish BI bets. The monetary policy decision is due tomorrow, with the consensus looking for an on hold decision (see this link for more details).
• PHP: USD/PHP continues to trend higher, last +0.24 to 54.50, though off session highs printed earlier at PHP54.615. The Philippines reported a balance of payments deficit of $1.606bn for the month of May vs. April's $415mn deficit. The central bank said it reflected foreign debt payment by the national government. The BSP will announce its monetary policy decision on Thursday, with consensus looking for a 25bp hike to the policy rate (see this link for more details).
• THB: Baht has lost a further 0.5% today. USD/THB last tracked just under 35.48. The Finance Minister noted that the BoT is closely monitoring THB movements, but it is "difficult" to guide the currency as its weakness stems from external factors, including sharp USD appreciation.