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Reflation Trade Drags Greenback Lower, Boosts Risk Assets


The reflation trade exerted its effects through the Asia-Pac session. Oil, equities and other risk assets have rallied while the greenback has slipped.

  • CNH: Offshore yuan rallied amid broad USD weakness as the reflation trade continued. USD/CNH hit the lowest level in 32 months.
  • SGD: Singapore dollar strengthened, GDP data showed the economy grew faster than expected at 3.8%, the MAS maintained its growth forecasts of 4%-6% and said the its stance remained accommodative which limited SGD strength
  • KRW: The won strengthened after robust export data which also helped push regional equity bourses to record highs.
  • INR: The rupee strengthened, releases on Friday showed that CPI dipped, the rate is now basically on the mid-point of the RBI's target range of 2%-6%, the data release also showed industrial production rebounded to post growth of 1% after a 1.9% decline the previous month.
  • IDR: Rupiah is higher, Indonesia's Tourism and Creative Econ Min said that the gov't considers opening an international travel corridor to Bali from low-risk countries, which have started Covid-19 vaccination campaigns.
  • MYR: Ringgitt moved higher. Science, Technology & Innovation Min Khairy pushed back against conspiracy theories surrounding the Covid-19 jab and called on Malaysians to support the national vaccination programme, expected to kick off at the start of this month.
  • PHP: The peso strengthened after the central bank kept rates on hold and said a rate cut was not forthcoming. The rate slipped under the PHP48.000 mark for the first time since Oct 2016, with increased volatility seen upon the breach of that round figure
  • THB: Baht strengthened as GDP fell less than expected. Q4 GDP fell 4.2% Y/Y against expectations of a 5.4% decline.

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