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

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.