INSIDE ASIA: Asian FX Rebounds Ahead of Weekend; IDR Falls
(Bloomberg) -- Asian currencies rebound ahead of the weekend as the dollar pulled back. The yuan gains after PBOC strengthened the reference rate for the first day in three.
- Investors took profit off the dollar rally, says Masakatsu Fukaya, emerging-market trader at Mizuho Bank in Tokyo, while a gain in the yuan also bolstered the Korean won
- Bloomberg dollar index slips 0.08%, after two days of gains post hawkish FOMC minutes; Fed Funds futures price 28% chance of June rate hike yday vs 32% on May 18
- MSCI Asia Pacific Index rises 0.49%; Brent gains almost 1%
- Ringgit & won lead gains; Rupiah and yen are among losers; Thailand’s market closed for holiday
- The yuan advances both on and offshore, with USD/CNH selling led by large-sized Chinese banks after yuan parity setting, according to an FX trader
- PBOC sets yuan fixing at 6.5510 vs 6.5531 day earlier
- More effective to curb yuan depreciation pressure through fixing among methods to counter currency volatility, according to Iris Pang, Greater China senior economist at Natixis; see story here on what PBOC could do to counter yuan weakness
- Newly-appointed PBOC Deputy Governor Zhang Tao will replace Zhu Min as IMF deputy managing director in July, Caixin reports
- Indonesia rupiah declines as investors unwind carry trade on hawkish Fed, and BI guidance yesterday suggested “slightly more dovish” approach
- Bank Indonesia lowers 2016 GDP growth estimate to 5%-5.4% y/y while leaving reference rate at 6.75% yesterday
- BI noted that if macroeconomic conditions remained stable, the “room for monetary easing that has been opened may be used at an earlier time,” Goldman Sachs economists write in note received today
- Yen gains, though heading for the first three-weekly loss in nine months
- Some ruling-party lawmakers in Japan are proposing to go ahead with sales tax, and address any hit to the economy through an enlarged fiscal package
- Abe aide Yamamoto says sales tax increase should go ahead
- Overseas investors bought 3.6t yen ($32.7b) of Japanese government bonds in April, the most since August 2007, amid expectations that BOJ would ease at its meeting then
- Malaysia April CPI data is due 12 p.m. local time, with est. at 2.1% y/y, lowest in 11 mos., vs March’s 2.6%
- FX reserves data for week ended May 13 due at 6 p.m. local; FX was at $97b as of April 29 vs $97.2b in prior period
- Korean won is set for third straight week of losses, longest streak since Feb
- HSBC says KRW could potentially be introduced into China’s CFETS basket on the yuan soon with a weight of 11.7%, strategists including Paul Mackel, Ju Wang write in May 19 note
- Philippine peso falls
- Balance of payments to reverse into surplus after robust GDP data, buoyancy in financial markets, BSP Governor Tetangco said yesterday
- Nation’s April FX reserves final reading at $83.7b vs $83.5b at preliminary data
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Masakatsu Fukaya (Mizuho Financial Group Inc)
Iris Pang (Natixis SA)
Zhang Tao (People's Bank Of China)
Zhu Min (International Monetary Fund)
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