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PBOC Cuts 5-Year LPR, Yuan Misses Out On Asia EM Bid

ASIA FX

Thursday's greenback weakness spilled over into the Asia-Pac session, setting the tone of early price action. Focus then turned to the PBOC, which cut its 5-Year Loan Prime Rate by a record amount of 15ppt, while keeping the 1-Year LPR unchanged.

  • CNH: Offshore yuan went offered, initially in reaction to headlines noting that Shanghai detected COVID-19 cases outside of designated quarantine facilities, snapping a six-day run with no community transmission.
  • KRW: Spot USD/KRW trimmed its initial losses, while USD/KRW 1-month NDF crept higher but fell short of testing yesterday's high. South Korea's Vice FinMin warned that "grave inflation situation may continue for a while," as factory-gate price growth accelerated to +9.2% Y/Y in April. Reminder that U.S. President Biden visits South Korea today.
  • IDR: Spot USD/IDR halved its opening losses as energy matters took focus. Indonesia's BoP current account surplus shrank more than expected to $221mn in Q1 (BBG est. $918mn). Elsewhere, the nation said it will reimpose a domestic market obligation policy that requires producers to sell a quota of their output locally. The announcement came after Indonesia announced the imminent removal of palm oil export ban.
  • MYR: Meanwhile, Malaysia said it was mulling a reduction to palm oil export tax to help fill the global shortage of the edible oil. The ringgit remained on the front foot.
  • PHP: The peso went bid after Bangko Sentral ng Pilipinas raised interest rates for the first time since 2018 on Thursday, flagging concerns about firming price pressures that are starting to generate second-round effects.
  • THB: Spot USD/THB dropped as Thailand's COVID-19 task force approved localised relaxation of curbs, allowing pubs and bars to re-open in some provinces.
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Thursday's greenback weakness spilled over into the Asia-Pac session, setting the tone of early price action. Focus then turned to the PBOC, which cut its 5-Year Loan Prime Rate by a record amount of 15ppt, while keeping the 1-Year LPR unchanged.

  • CNH: Offshore yuan went offered, initially in reaction to headlines noting that Shanghai detected COVID-19 cases outside of designated quarantine facilities, snapping a six-day run with no community transmission.
  • KRW: Spot USD/KRW trimmed its initial losses, while USD/KRW 1-month NDF crept higher but fell short of testing yesterday's high. South Korea's Vice FinMin warned that "grave inflation situation may continue for a while," as factory-gate price growth accelerated to +9.2% Y/Y in April. Reminder that U.S. President Biden visits South Korea today.
  • IDR: Spot USD/IDR halved its opening losses as energy matters took focus. Indonesia's BoP current account surplus shrank more than expected to $221mn in Q1 (BBG est. $918mn). Elsewhere, the nation said it will reimpose a domestic market obligation policy that requires producers to sell a quota of their output locally. The announcement came after Indonesia announced the imminent removal of palm oil export ban.
  • MYR: Meanwhile, Malaysia said it was mulling a reduction to palm oil export tax to help fill the global shortage of the edible oil. The ringgit remained on the front foot.
  • PHP: The peso went bid after Bangko Sentral ng Pilipinas raised interest rates for the first time since 2018 on Thursday, flagging concerns about firming price pressures that are starting to generate second-round effects.
  • THB: Spot USD/THB dropped as Thailand's COVID-19 task force approved localised relaxation of curbs, allowing pubs and bars to re-open in some provinces.