Risk Reprieve Favours Asia EM FX, Peso Lags On Dovish BSP Remarks

Improving risk environment lent support to Asia EM FX space as risk assets breathed a sigh of relief in response to a confirmation that leaders of the U.S. & Russia have agreed in principle to hold a security summit (date tba), provided that Moscow does not attack Ukraine.

• CNH: Spot USD/CNH oscillated as participants weighed improvement in the broader risk backdrop against the PBOC's decision to keep its Loan Prime Rates unchanged this month.
• KRW: South Korean won swung to a gain, receiving a fillip from improving risk appetite. Domestic fiscal matters continued to draw attention as Yonhap reported that lawmakers from both sides of the aisle agreed to hold a plenary vote on extra budget today.
• IDR: The rupiah held a tight range, even as Gov Warjiyo suggested that Bank Indonesia could begin to unwind its debt monetisation programme next year. On the interest rate front, Warjiyo noted that an adjustment to the main policy rate could come in Q3 or Q4.
• MYR: Spot USD/MYR erased its initial gains on aforesaid risk dynamics. Malaysia's Health Ministry said it is preparing guidelines for re-opening international borders, possibly as soon as at the beginning of Q2.
• PHP: The Philippine peso traded on the back foot. BSP Gov Diokno noted that the Philippines has "room to manoeuvre" despite looming Fed tightening as the inflation outlook "looks good."
• THB: The baht caught a bid after latest data showed that Thailand's Q4 economic growth surpassed expectations. In their post-release statement, the NESDC kept its 2022 GDP forecast unchanged at +3.5%-4.5% Y/Y, while lifting the CPI projection to +1.5%-2.5% Y/Y (prev. +0.9%-1.9%).