Weaker USD Only Benefits Some Asian Currencies

USD/Asia pairs have been mixed today. CNH, KRW and SGD all firmer, but MYR, THB, INR and IDR have struggled. Weaker USD sentiment against the majors has only benefited some currencies within the region.

• CNH: USD/CNH is back sub 6.7700, last trading just under 6.7650. Sentiment has been aided by a weaker USD, although CNH has lagged the likes of EUR, AUD etc. The USD/CNH fix was close to neutral, while onshore equities are trading modestly lower.
• KRW: 1 month USD/KRW has slipped back below 1310 this afternoon, after spending much of the session in a 1312/1315 range. Higher equities have helped, with the Kospi up +0.75% at this stage. Earlier the first 20 days of export data for July showed on-going export growth (14.5%), but a still large trade deficit.
• INR: USD/INR spot is back above 80.00, ignoring the weaker USD trend evident elsewhere. There is some talk of increased hedging behavior as the pair breaches the 80.00 figure level.
• IDR: Spot USD/IDR is above 15000, (last 15017). 22 out of 36 economists in a Bloomberg survey expect Bank Indonesia to keep the 7-Day Reverse Repo Rate unchanged but the rest have pencilled in a 25bp hike. We think the Bank is more likely to stand pat this time (see https://marketnews.com/mni-bi-preview-july-2022-on-the-cusp-of-hike ). That said, a pre-emptive rate rise cannot be ruled out and remains a hawkish risk.
• THB: Spot USD/THB has resumed gains, hitting fresh cyclical highs earlier today. We got close to 36.80, before easing back to 36.75 now. Political jitters may be adding pressure to the baht as Thai parliament resumes the no-confidence debate against PM Prayuth and 10 other ministers. Lawmakers will vote on the motion this Saturday.
• SGD: USD/SGD is lower, down to the low 1.3910 region. The pair has found a base ahead of 1.3900 in recent sessions. The NEER is still higher though, per Goldman Sachs estimates.