Optimism On Covid Front Lends Support To IDR & THB

Fading geopolitical worry related to the Russia-Ukraine standoff shifted focus to domestic catalysts in Asia EM space. While there has been no breakthrough in the security crisis unfolding in Eastern Europe, there has been no material escalation either, with all sides pointing to the need for continued diplomatic talks.

• CNH: Spot USD/CNH has slipped, probing the water below yesterday's worst levels. The PBOC injected a net CNY100bn into the financial system via 1-Year MLF and kept the interest rate applied to the operations unchanged at 2.85%, refraining from a continuation of recent rate cuts.
• KRW: South Korean won led losses in the Asia EM basket, as daily Covid-19 cases hit another historic record. Meanwhile, officials pledged to take all available policy steps to stabilise markets if the Russia-Ukraine situation escalates.
• IDR: The rupiah staged a rally after Indonesia said that it eyes lifting all quarantine requirements for inbound travellers in April and is shortening the mandatory quarantine period in the meantime. Elsewhere, Indonesia's trade surplus shrank less than forecast, but shipments missed expectations by a fair margin.
• MYR: Spot USD/MYR ground lower as the sense of broader geopolitical risk receded somewhat, while Malaysian headline flow offered nothing to rock the boat.
• PHP: Spot USD/PHP erased its initial gains. Participants are on the lookout for December overseas cash remittances data. The Philippines downgraded its Covid-19 risk classification Monday, as Covid-19 cases ease.
• THB: Spot USD/THB plunged to its lowest point since early September, as national Covid-19 task force suggested that nationwide Covid-19 cases should begin levelling off and falling this week, even if several provinces see "brief spikes" in infections.