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Russia/Ukraine Tension Spills Over Into Asia, BSP Policy Decision Eyed

ASIA FX

Selling pressure hit Asian EM currencies as geopolitical worry returned on the back of headlines from Russian media noting that Ukraine has attacked Luhansk People's Republic in breach of ceasefire agreements. While exchanges of fire between Ukrainian troops and Donbas separatists are not unusual, the circulation of these reports by Russian state media came amid Western suspicions that the Kremlin might be looking for a pretext to launch an intervention.

  • CNH: Offshore yuan remained stable, with an uptick in USD/CNH in reaction to Russia headlines promptly faded.
  • KRW: Spot USD/KRW erased its initial losses, with gyrations in broader risk sentiment in the driving seat. Meanwhile, South Korea said that it is preparing for potential trade disruptions in case the Russia-Ukraine standoff escalates.
  • IDR: The rupiah underperformed, extending losses as broader risk-off flows kicked in. Domestic headline flow was rather limited.
  • MYR: The ringgit joint its regional peers and sold off in reaction to renewed geopolitical angst.
  • PHP: Gains in spot USD/PHP took the rate closer to key resistance from PHP51.500 associated with BSP interventions. The Philippine central bank will announce its monetary policy decision today but is not expected to touch policy levers.
  • THB: The baht returned from a holiday on a firmer footing and remained in positive territory, despite trimming some gains on the back of Russia headlines. The PDMO played down the risk posed by rising global interest rate to Thailand's financial position.

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