Won Goes Offered On Eve Of Election, Yuan Firms Post-PBOC Fix

The Asia EM space got some reprieve from recent risk-off impulses, with yuan strength lending some further support. South Korean won lagged its regional peers and refused to find poise on the eve of a local presidential election.

• CNH: Spot USD/CNH went offered after the PBOC set the central USD/CNY mid-point 54 pips below sell-side estimate, which represented the strongest bias (in yuan terms) since Oct 2020. The fixing marked an about-face from China's central bank, who on several recent occasions had used their daily fixings to signal discomfort with redback appreciation.
• KRW: Spot USD/KRW rallied to fresh cycle highs, with South Korea's looming presidential election fuelling uncertainty. Final opinion polls showed that the main candidates were locked in a tight race, although opposition People Power Party's Yoon has since secured the backing of the third-ranking candidate. USD/KRW 1-week implied volatility surged to levels not seen since Nov 2020, with other tenors also posting new cycle highs.
• IDR: The rupiah was slightly firmer, possibly drawing some support from better oil prices. Domestic headline flow failed to provide much to write home about.
• MYR: Spot USD/MYR traded on a stronger footing. The Klang Valley and parts of Selangor were hit by heavy rainfall on Monday, just three months after the nation experienced devastating floods.
• PHP: Spot USD/PHP pulled back from a fresh cycle high of PHP52.310. Comments from Philippine officials were doing the rounds, with the government looking into ways of mitigating the impact of ongoing war in Ukraine on domestic economy.
• THB: Spot USD/THB crept to a one-month high. Inflation fear remained evident, with the government discussing ways to counter rising oil prices.