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INR To Fresh Record Lows, KRW Lower on Equity Outflows

ASIA FX

A mixed picture for USD/Asia pairs. USD/CNH has been range bound, while the won has resumed its downtrend, with USD/KRW back above 1293. INR has weakened to fresh record lows, while the PHP peso has also depreciated. THB has outperformed on tourism hopes.

  • CNH: USD/CNH has been range bound today. We met offers above 6.7100, much like the overnight session. The pair last tracked just below 6.7050. The CNY fixing was slightly weaker than expected. China equities are lower but in line with regional trends. Note tomorrow sees PMI prints.
  • KRW: Spot USD/KRW has rebounded back to levels that prevailed at the start of the week, +1293. Renewed net equity outflows on the back of weaker equity leads is the main driver. Earlier Korea consumer sentiment fell back to 2021 lows, while onshore media reported the BoK will consider a large hike (likely 50bps) if June inflation gets to 6% YoY.
  • INR: USD/INR continues to push higher after yesterday's sharp bounce. The pair is up another 0.20% today and close to the 79.00 level. We got to 78.98 in early trade, but are now back to 78.91. We still expect the RBI to curb the rate of depreciation.
  • IDR: Spot USD/IDR has edged higher and last deals +8.5 figs at IDR14,846. Monthly CPI data is up on Friday. Bloomberg consensus looks for a +4.18% Y/Y headline. Bank Indonesia said it expects inflation to print at +0.5% M/M, but didn't provide the estimate for annual price growth.
  • PHP: Spot USD/PHP turned bid as onshore markets re-opened, playing catch-up with overnight risk-off impetus. We hit a high of 55.08 before selling interest emerged and now sit back below 55.00. Selling pressure that saps strength from the peso is amplified by recent comments from the Philippines' top central bankers, who said that they are allowing the market to freely determine currency levels.
  • THB: USD/THB is down slightly today, back to the low 35.00 region. Further spillover from China's relaxation of covid quarantine travel rules is still evident. The Thai authorities also noted tourist arrivals jumped 44% YoY in June. A further recovery is expected in the second half.

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