Negative Risk Environment

Asia EM currencies weaken in a negative risk environment with coronavirus concerns weighing.

• CNH: Offshore yuan is weaker, there is continued speculation around a possible RRR cut, the CSJ suggested the cut is likely to be targeted at SME's and could come at the end of Q3 if upward pressure on CPI eases.
• SGD: Singapore dollar is weaker, markets still disappointed by the statement from health authorities yesterday that they will tie removal of further restrictions with vaccination progress which is expected to be mid-July when over 50% of the population have been inoculated.
• KRW: The won is lower, USD/KRW stopping just short of 2021 highs. New coronavirus cases hit a record 1275, there were some reports from Yonhap that South Korea is considering raising social distancing rules in South Korea, as reported previously, while adding that health authorities expect virus cases to continue rising for one-week.
• TWD: Taiwan dollar is weaker, USD/TWD reclaiming the 28.00 handle. There is still concern over coronavirus numbers but the CDC suggested keeping the soft lockdown with some easing.
• MYR: Ringgit fell, Bank Negara Malaysia will deliver their monetary policy decision today and almost all analysts expect them to leave the Overnight Policy Rate unchanged. Elsewhere political shenanigans drag on, early this morning, UMNO withdrew its support for PM Muhyiddin and demanded his immediate resignation
• IDR: Rupiah declined, Indonesia broadened its Covid-19 restrictions to dozens of localities across the country on Wednesday, at a time when its healthcare system operates beyond capacity. The number of fatalities from Covid-19 exceeded 1,000 on Wednesday, for the first time on record. Elsewhere consumer confidence printed 107.4 in June from 104.4 in May.
• PHP: Peso dropped for the seventh consecutive session, USD/PHP is at its highest for a year. A clearance of the nearby PHP50.000 figure would allow bulls to set their sights on Jun 23, 2020 high of PHP50.245.
• THB: Baht is weaker, consumer confidence dropped to 43.1 in June from 44.7. Elsewhere Thailand's Covid-19 task force said Wednesday that they will consider locking down hotspots in Bangkok and neighbouring provinces, once proposals are submitted by experts. Officials refused to rule out a scenario in which the number of new infections would rise by 10,000 per day next week.