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CNH Outperformance Persists

ASIA FX

Most USD/Asia pairs continue to trend higher on recessionary fears and weaker regional equity market sentiment. A number of pairs have printed fresh cyclical highs. CNH outperformance continues though, with the currency shrugging off renewed onshore Covid concerns.

  • CNH: USD/CNH has tracked familiar ranges, between 6.7060 and close to 6.7200. Onshore equities are off by more than 1%, as lockdown fears re-emerge on rising case numbers in Shanghai. The city will conduct mass testing, while restrictions on entertainment facilities have been tightened. Still, CNH outperforming the broader Asian FX complex.
  • KRW: USD/KRW spiked above 1310 at the open, but settled back at 1305/1310 range after that. We remain below the overnight high of 1315 for the 1 month NDF. Onshore equities are down more than 1.5%, with offshore investors unloading $266.3mn in local equities, nearly offsetting all of yesterday's net inflow.
  • INR: USD/INR, is down slightly, back to 79.30 after closing yesterday at 79.36. Still, the 1 month NDF has pushed back above 79.50. Onshore equities are higher, while bond yields are lower (10yr back to 7.32%, -7bps so far). The sharp drop in oil prices is aiding sentiment in this space. We are now comfortably below the mid June highs above 7.60% for the 10yr.
  • IDR: USD/IDR spot has pushed through 15000, +30figs on the day to 10518. Some selling interest emerged after the BI Governor stated the central bank continues to stabilize the rupiah. BI remains comfortable with the level of inflation and already started to adjust policy through liquidity operations the Governor stated.
  • THB: USD/THB has pushed above 36.00, +0.55% on yesterday's closing levels. A BoT Assistant Governor appeared less hawkish compared to recent BoT rhetoric, still it is a little over a month out from the next BoT meeting so we are likely to hear more on the outlook before then.
  • MYR: USD/MYR has gotten close to previous YTD highs, before edging back down to 4.4240. Lower oil prices are weighing, while the other focus point is the upcoming BNM decision due later today. The market expects another 25bps hike, see our full preview here for more details.

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