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MYR & THB Standouts In The Past Week, TWD A Laggard

ASIA FX

USD/Asia pairs are trading mixed in the first part of Friday dealings. Tech equity sensitive plays like KRW and TWD are weakest performers, with equity weakness evident for bourses in these countries. Earnings headwinds in the space/US slowdown fears are weighing on sentiment. Trends are more positive elsewhere, with MYR and THB the best performers. CNH is also higher. This is largely reflected in the returns for the past week as well.

  • USD/CNH has tracked lower, last near 7.2340, around 0.25% stronger in CNH terms. We had a higher USD/CNY fixing earlier and USD/JPY dips have been supported, but the yuan has still outperformed. Local equities are tracking lower, albeit down much more modestly compared to the tech sensitive plays in the region. Recent lows in the pair are near 7.2100.
  • Spot USD/KRW pushed higher in early dealings, getting to 1377.15, but we sit back lower now, last near 1372, still 0.20% weaker in won terms. Onshore equities are 3.4% weaker, weighed by broader tech losses. We remain comfortably off multi week highs for the pair above 1390.
  • USD/TWD is higher, last near 32.85, which is very close to recent cycle highs. The currency has been the worst performer in EM Asia FX the past week, with flat spot returns. Concerns around global growth and implications for the tech backdrop may leave the market to fade USD/TWD upticks.
  • MYR continues to outperform. Raised Fed easing prospects, coupled with the large onshore pension fund shelving plans for offshore investments, have been clear positives this past week. Global growth concerns are not weighing at this stage. USD/MYR last tracks near 4.54, up a further 0.65% today, capping ringgit gains for the week at 2.5%. Next downside target is just under 4.5100.
  • THB is up just over 1.6% for the week, with broader USD trends/Fed expectations helping, along with the firmer gold price. USD/THB was last near 35.50, around 0.30% stronger for the session so far today.
  • USD/IDR is around 16250 in recent dealings. This leaves us off recent highs, but only modestly higher for the week, with the rupiah lagging the likes of MYR and THB. Comments from the FinMin around the growth outlook (5-5.2% expected this year) and that the focus will remain on IDR stability crossed. They haven't shifted sentiment. The FinMin also noted that capital flows into broader EM and Indonesia are likely to remain limited. The BI added that capital flows have been affected by higher short term rates.

Fig 1: Asia FX Spot Returns - Past Week

Source: MNI - Market News/Bloomberg

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