Post-BoJ Impetus Hits Asia EM Currencies

Market reaction to the BoJ's monetary policy decision reverberated across Asia, as firm demand for USD/JPY pushed USD/Asia crosses higher.

• CNH: Offshore yuan followed the yen lower, as the BoJ doubled down on bond purchases in defence of its cap on 10-Year yields. Spot USD/CNH run as high as CNH6.6379, its highest point since Nov 2020. The redback earlier ignored a slightly firmer than expected PBOC fix, with yuan reference rate set 36 pips below average sell-side estimate.
• KRW: Spot USD/KRW extended gains post-BoJ and crossed above the KRW1,270.00 mark for the first time since the early days of the pandemic. FinMin Hong noted that officials are keeping an eye on FX markets and stand ready to take stabilisation steps if needed.
• IDR: The rupiah retreated after Indonesia made a U-turn on the scope of its new restrictions on palm oil shipments. The authorities said that the rules will apply to crude palm oil after all, despite earlier suggesting that only certain refined products would be included.
• MYR: Spot USD/MYR surged to new two-year highs on the back of broader market impetus, even as Malaysia prepares to east its Covid-19 curbs.
• PHP: BSP Gov Diokno's recognition of the need to withdraw stimulus supported the peso early on, but the Philippine currency reversed gains on the back of post-BoJ impetus.
• THB: Spot USD/THB extended its recent gains, printing best levels since 2017 as a result. The baht faced some additional headwinds as Thailand's industrial output unexpectedly shrank in March, with the previous reading revised lower.