USD/Asia Pairs Edge Higher, But IDR Outperforms

Most USD/Asia pairs are slightly higher, albeit still in reduced liquidity conditions, with many centres still closed for LNY holidays. USD/IDR is the main exception, sharply lower in the first part of trade, but from the low 14900 levels we have clawed higher. The dollar is away from lows against the majors, while intervention reports and push back against currency strength are evident elsewhere. Tomorrow, South Korea and Singapore markets return, with Q4 GDP printing in South Korea and inflation figures in Singapore. The BoT decision is also due in Thailand (+25bps expected).

• USD/INR has opened dealing at 81.60/70, up ~0.3% from yesterday's closing levels. This follows yesterday's gain, with USD/INR dips in early trade not sustained, as headlines crossed on reported state bank dollar buying, which came when the pair was sub 81.00. The trough to peak move was ~0.50%. The pair is now trading above its 100-Day EMA, with bulls now targeting the 20-day EMA at 81.85. Bears first look to break Jan 2023 to regain upper hand.
• Onshore Indonesian markets have re-opened today, and USD/IDR is breaking lower. The pair was last at 14943, down nearly 1% versus closing levels from last Friday. Earlier lows were close to 14900, which is back to mid September levels from 2022. We are comfortably below all key EMAs (200 day is 15145.7). IDR is riding the better risk appetite tone, while net inflows into local bonds have rebounded strongly since the start of the year. Foreign holdings are up close to 5%. Up to Jan 19 we had net inflows of just under $2.4bn into local bonds. The onshore 10yr yield has fallen from early Jan highs around 7.10% to 6.63% today.
• USD/THB has been range bound so far today, in a tight 32.70/32.79 range. We were last at the upper end of this range, around -0.15% weaker in baht terms versus yesterday's closing levels. Lows yesterday came in just under 32.60, while moves in to the 33.00/33.20 range have drawn selling interest recently. The main event risk is tomorrow's BoT decision. +25bps is widely expected, see our full preview here. We are still waiting for Dec trade figures as well, which weren't released at the time of writing. The Thai Shippers Group stated earlier the BoT should refrain from raising rates tomorrow and take measures to stabilize the baht in the 34.00-35.00 region.