MNI China Daily Summary: Wednesday, Sept 11

MNI BRIEF: Cautious Policy Adjustments Eyed - BOJ's Nakagawa

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CHINA PBOC CONDUCTS CNY210 BLN VIA 7-DAY REVERSE REPOS WEDS

CHINA SETS YUAN CENTRAL PARITY AT 7.1182 WEDS VS 7.1136

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THB: Rallies To Fresh Highs Amid Resurgent Equities, US NFP Next Risk

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GlobalEM BulletBulletAPACEmerging Market NewsRegionThailand

USD/THB continues to track lower, the pair last in the 33.50/55 region. This is 0.40% firmer in baht terms and levels last seen in Feb 2023. The pair hit a trough in early 2023 just under 32.60. Baht is up nearly 1% for the past week, the best EM Asia performer in the past week. 

  •  Local equities are rallying at the open, up over 1%. This follows yesterday's 2.84% gain for the SET. We are more than 10% above recent August lows. Yesterday offshore investors added $222.6mn to local equity markets yesterday. This was the best day of inflows since end 2022.
  • Bloomberg notes a smooth political transition and hopes of fiscal stimulus have buoyed equity market sentiment. Severe underperformance relative to other markets in the past 12 months may also be driving allocation shifts.
  • In any event there has clearly been some positive over to THB FX. Bond inflows have also been positive September to date.
  • Official rhetoric around excessive THB gains will be a watch point, with the NEER back to early 2023 highs. The 20-day EMA on USD/THB is back at 34.44.
  • The near term watch point for USD/THB will also be US NFP. Baht correlations have been around 58% with the US real 10yr yield over the past 6 months or so. USD/THB has been nicely correlated with the downshift in US-TH yield differentials in recent months, see the chart below. 

Fig 1: USD/THB Versus US-TH 2yr Government Bond Yield Spread 

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USD/THB continues to track lower, the pair last in the 33.50/55 region. This is 0.40% firmer in baht terms and levels last seen in Feb 2023. The pair hit a trough in early 2023 just under 32.60. Baht is up nearly 1% for the past week, the best EM Asia performer in the past week. 

  •  Local equities are rallying at the open, up over 1%. This follows yesterday's 2.84% gain for the SET. We are more than 10% above recent August lows. Yesterday offshore investors added $222.6mn to local equity markets yesterday. This was the best day of inflows since end 2022.
  • Bloomberg notes a smooth political transition and hopes of fiscal stimulus have buoyed equity market sentiment. Severe underperformance relative to other markets in the past 12 months may also be driving allocation shifts.
  • In any event there has clearly been some positive over to THB FX. Bond inflows have also been positive September to date.
  • Official rhetoric around excessive THB gains will be a watch point, with the NEER back to early 2023 highs. The 20-day EMA on USD/THB is back at 34.44.
  • The near term watch point for USD/THB will also be US NFP. Baht correlations have been around 58% with the US real 10yr yield over the past 6 months or so. USD/THB has been nicely correlated with the downshift in US-TH yield differentials in recent months, see the chart below. 

Fig 1: USD/THB Versus US-TH 2yr Government Bond Yield Spread 

Keep reading...Show less