CNH Recovers Further, INR Rebounds

CNH has once again traded on a firmer footing, with USD/CNH dipping back below 6.7800 before support emerged. This has helped the rest of the region regain some composure in the FX space. INR has opened up firmer, after onshore markets were closed for the first 2 days this week. USD/KRW has steadied on reports that North Korea test fired 2 cruise missiles.

• CNH: The China currency is again on the front foot today. Onshore and Hong Kong equities are higher, with some likely positive spill-over from headlines around re-opening the China/HK border. It was also reported that Premier Li is pushing key provinces for more pro-growth policies. Other than these factors, it's difficult to see what has driven CNH strength today.
• KRW: 1 month USD/KRW has been range bound today, with a slight downside bias, as USD/CNH fell through the afternoon session. Onshore equities are weaker in Korea, the Kospi off by 0.7%, the Kosdaq -1.00%, which has likely limited won gains to a degree. A short time ago, it was reported that North Korea had fired two cruise missiles earlier today into the west sea. 1 month USD/KRW has edged back above 1309 on these reports.
• INR: Spot USD/INR has re-opened lower, after onshore markets were closed for the first 2 days of this week. We are around 0.45% below closing levels from last week, currently sitting just under 79.30. Since onshore markets closed on Friday, the DXY is higher and we had a strong USD/CNH bounce at the start of the week, so the rupee strength has outperformed those trends to a degree. Onshore equities continue to push higher, while lower oil prices, particularly since the end of last week, is helping.
• PHP: Spot USD/PHP has drifted a little lower this afternoon. We traded above 55.90 early on, but the pair is now back sub 55.80. The main focus is on tomorrow's BSP decision. We expect Bangko Sentral ng Pilipinas to raise its key policy rate by 50bp this week in a bid to curb above-target inflation and defend the beleaguered peso. Governor Medalla repeatedly signalled that the decision this week would be between a 25bp or 50bp rate rise (see this link for our full preview).
• THB: Spot USD/THB last deals -0.040 at THB35.385, consolidating below its 50-DMA. Global funds have been net buyers of Thai equities on each day since Aug 5, buying a net $141.2mn in local stocks on Tuesday. The SET index has extended its bullish run today, breaking above its 200-DMA/61.8% retracement of the Apr - Jul slide.