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Yuan Takes Hit From Weak Bias In PBOC Fix, But Quickly Licks Its Wounds

ASIA FX

The dollar index (DXY) lost some altitude along U.S. Tsy yields, which applied pressure to USD/Asia crosses late doors. The PBOC drew attention by failing to trim benchmark policy rates despite expectation that it would take a more supportive attitude as China is battling its renewed outbreak of Covid-19.

  • CNH: Offshore yuan had a round trip to multi-month highs. It took a hit as the PBOC set the mid-point of permitted USD/CNY trading range ~100 pips above average estimate, while keeping the Loan Prime Rates unchanged (BBG consensus looked for 5bp cuts). But these losses proved short lived and USD/CNH pulled back into negative territory amid a bout of broad-based USD sales.
  • KRW: Spot USD/KRW had a look above the KRW1,235.00 mark before erasing its initial gains. The IMF slashed its 2022 growth outlook for South Korea, while revising the inflation forecast sharply higher.
  • IDR: The rupiah held a fairly tight range, retaining its recent stability. It was unfazed by yesterday's monetary policy decision from Bank Indonesia, which kept the 7-Day Reverse Repo Rate unchanged, while hinting at less urgency to tighten.
  • MYR: The ringgit paced losses in the Asia EM basket. Spot USD/MYR opened sharply higher as onshore players returned from a public holiday. The rate trimmed the bulk of gains as the greenback lost ground, but managed to print a fresh multi-month high beforehand.
  • PHP: The peso operated in close proximity to the PHP52.500 mark, which has provided a ceiling to recent price action.
  • THB: Spot USD/THB rose to its highest point since early December, before giving away the bulk of those gains.
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The dollar index (DXY) lost some altitude along U.S. Tsy yields, which applied pressure to USD/Asia crosses late doors. The PBOC drew attention by failing to trim benchmark policy rates despite expectation that it would take a more supportive attitude as China is battling its renewed outbreak of Covid-19.

  • CNH: Offshore yuan had a round trip to multi-month highs. It took a hit as the PBOC set the mid-point of permitted USD/CNY trading range ~100 pips above average estimate, while keeping the Loan Prime Rates unchanged (BBG consensus looked for 5bp cuts). But these losses proved short lived and USD/CNH pulled back into negative territory amid a bout of broad-based USD sales.
  • KRW: Spot USD/KRW had a look above the KRW1,235.00 mark before erasing its initial gains. The IMF slashed its 2022 growth outlook for South Korea, while revising the inflation forecast sharply higher.
  • IDR: The rupiah held a fairly tight range, retaining its recent stability. It was unfazed by yesterday's monetary policy decision from Bank Indonesia, which kept the 7-Day Reverse Repo Rate unchanged, while hinting at less urgency to tighten.
  • MYR: The ringgit paced losses in the Asia EM basket. Spot USD/MYR opened sharply higher as onshore players returned from a public holiday. The rate trimmed the bulk of gains as the greenback lost ground, but managed to print a fresh multi-month high beforehand.
  • PHP: The peso operated in close proximity to the PHP52.500 mark, which has provided a ceiling to recent price action.
  • THB: Spot USD/THB rose to its highest point since early December, before giving away the bulk of those gains.