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Won Firms On Accelerating Inflation, Omicron Risk Assessment Continues

ASIA FX

The continued assessment of threat from the Omicron variant of the coronavirus drove mixed price action in Asia EM FX space. South Korean won outperformed after the release of upbeat local inflation data.

  • CNH: Spot USD/CNH traded marginally below neutral levels, as a downtick in the DXY weighed on the pair.
  • KRW: The won went bid as South Korea's annual CPI inflation accelerated to the fastest pace since 2011, beating analysts' expectations. Spot USD/KRW printed a two-week low, even as South Korea's daily Covid-19 cases and critical cases rose to all-time highs, while the local press suggested that the gov't is poised to announce tighter social distancing measures.
  • IDR: Spot USD/IDR showed at its highest point since Nov 5 after Moody's warned against risks to Indonesia's credit rating.
  • MYR: Spot USD/MYR crept higher amid Omicron worry, with Health Min Khairy noting that the gov't will conduct daily risk assessments. Bank Negara Malaysia confirmed that local FX, money and bond markets will be open on Friday despite a holiday in Kuala Lumpur.
  • PHP: The peso traded on a softer footing. The Bankers Association of the Philippines noted that trading hours for USD/PHP spot and swap markets will be extended from next week.
  • THB: Spot USD/THB rose to a fresh multi-week high, as the baht brought up the rear in the Asia EM pack. Concerns over the impact of the Omicron coronavirus variant on domestic tourism industry may have sapped some strength from the THB.

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