South East Asia FX Again Outperforms The North, BNM Decision Still To Come Today

USD/Asia pairs are mostly lower, although SEA FX is once again outperforming NEA FX. In SEA, MYR has surged, while THB has risen. IDR spot is higher but the 1 month NDF is little changed. CNH has been steady, despite positive trade data. The KRW NDF is closed to unchanged. Still to come today is Taiwan inflation figures, along with the BNM decision, no change is expected. Tomorrow, we have South Korea current account data, while Philippines bank lending figures are due. Later on, Taiwan trade figures are out.

• USD/CNH volatility remains remain low, the pair not far from 7.2090 in recent dealings. A weaker equity tone is not helping sentiment (although CNH didn't rally earlier when equities were firmer), while USD/CNY onshore spot remains close to 7.2000, with this pair largely ignoring broader USD trends in recent weeks. We had better trade figures earlier, but there was little positive follow through for the yuan.
• Better export growth and the healthy trade surplus is being offset by capital outflows from a yuan standpoint. Reuters noted yesterday that domestic investors are butting up against outbound investment limits. General confidence around the economic outlook also remains a headwind, while China's low rates compared to other major economies, particularly the US, is likely driving preferences towards foreign currency holdings rather than the yuan.
• Spot USD/KRW is back to 1330, but the 1 month NDF couldn't build on early downside momentum sub 1326. We are back to 1328 only marginally firmer in won terms for the session. Spillover from yen gains is fairly limited at this stage. Local equities are back to slightly positive for the session, but haven't been impact KRW so far today.
• USD/INR is extending its break sub the simple 200-day MA, last near 82.77 (earlier lows were at 82.725). This is the lowest levels in the pair since early September last year. Whilst percentage change moves are modest ( the rupee is up only 0.55% so far this year), its outperformance against the rest of EM Asia FX remains evident. On top of the news from earlier in the week around India bond inclusion into Bloomberg's EM bond index, growth expectations remain elevated as well. RBI Governor Das stated growth may be closer to 8% for the fiscal year (ending this March), which would be above the government's target (BBG). Survey business sentiment measures remain very elevated, particularly compared to the rest of the world.
• MYR is the best performing currency in EM Asia so far today, up around 0.50%. USD/MYR was last near 4.7090. This is close to 4.7065, which is the 100-day EMA. Yesterday's intra-day high ran out of steam around the 20-day EMA (currently near 4.7485). We saw fresh rhetoric from BNM late yesterday, with the central bank stating it is committed to ensuring ringgit stability, while also increasing monitoring of export proceeds into the local currency (BBG). Later on today, the BNM policy decision is seen on hold, but financial stability issues, particularly FX are likely to be a focus point (see our full preview here).
• The baht has strengthened 0.3% against the US dollar today to around 35.58, close to the intraday low of 35.55. USD/THB is down 1.7% since its recent peak on February 15. For USD/THB we are close to the 100-day EMA near 35.52, below that is the 200-day. We haven't been below that support point since Jan of this year. The University of Thai Chamber of Commerce reported consumer confidence rose almost one point to 63.8 in February to be its highest since February 2020, pre-Covid. Gold prices reached a new high today of $2161.48/oz. Correlations with USDTHB remain skewed inversely with gold, so this along with a firmer yen, have likely seen positive spill over effects for the baht today.