Talk Of Looser Covid-19 Rules Helps Baht Defy Regional Trend, Post-LNY PBOC Fix Surprises

The first post-LNY PBOC fix took focus in Asia and was worth watching indeed, as China's central bank showed its predilection for a weaker redback. Elsewhere, most currencies from the Asia EM basket slipped on familiar headwinds to risk appetite, although the baht managed to eke out some gains.

• CNH: The PBOC set the mid-point of permitted USD/CNY trading band at CNY6.3580, 252 pips above sell-side estimate, which was the largest upside surprise since at least June 2018. Offshore yuan took a hit and swung to to a loss, but then returned toward neutral levels.
• KRW: Spot USD/KRW crept higher, with the won undermined by continued upsurge in South Korea's daily Covid-19 infections. PM Kim flagged the possibility of an increase in the extra budget recently submitted to parliament.
• IDR: The rupiah lost ground on broader risk aversion, even as Indonesia's Q4 annual GDP growth proved faster than expected. Note that Bank Indonesia will hold their monetary policy meeting on Thursday.
• MYR: Spot USD/MYR climbed in Asia-Pac trade, with Malaysian Health Min Khairy sounding the alarm on rising daily Covid-19 cases.
• PHP: Spot USD/PHP caught a bid, as the peso led losses in Asia EM FX space, even as local headline flow was fairly thin.
• THB: The Thai baht was among few regional currencies which outperformer the greenback, drawing support from the government's plans to relax Covid-19 restrictions and form travel bubbles with China and Malaysia provided.