INSIDE ASIA: Currencies Drop to Multi-Month Lows on Hawkish Fed
(Bloomberg) -- Asian currencies fall to lowest in 2-3 months on broad dollar rally after hawkish FOMC minutes boost pricing of June rate hike nearly 3 fold. Rupiah, ringgit and won lead losses while China’s yuan is fixed at weakest since Feb. Malaysia and Indonesia 5-yr CDS premiums rise most in 3 weeks.
- Fed minutes fuel speculation of June rate hike, contributing to increases in U.S. interest rates and the dollar and putting riskier assets under downward pressure, FPG Securities CEO Koji Fukaya says in interview
- Emerging mkts and negative yielding currencies are most at risk in the short-term, Steven Englander, Citigroup head of G-10 FX strategy says in note received today; expect second round of reaction in mkts today if speeches from Fed’s Fischer and Dudley confirm June hike is seriously on the calendar
- Dollar Index rises 0.1%, following 0.6% gains yesterday on hawkish FOMC minutes
- Fed Funds futures price 32% chance of June rate hike vs 12% yday and 4% on Monday
- MSCI Asia Pacific Index falls 0.8%; WTI drops 1.3%
- China’s onshore yuan declines for third day while offshore counterpart bucks trend to rise for 3rd session this week
- PBOC weakens yuan fixing to 6.5531, lowest in three months
- Moody’s says China economy will slow gradually to ~6.3% in 2016
- Chinese economy has potential and conditions to maintain mid-to-high-paced growth, Xinhua reports
- China CFETS is testing standardized yuan option contracts, which may start as early as June, Shanghai Securities News reports
- Introduction of standardized yuan options will help improve liquidity and boost trading volume, Commerzbank says
- Indonesia rupiah tumbles 1% to 3-mo. low ahead of BI rate decision
- BI may keep reference rate unchanged at 6.75% today, according to all 19 economists surveyed by Bloomberg
- Malaysia ringgit hit lowest since March 17 ahead of BNM rate decision where no change is expected, according to Bloomberg survey
- CIMB clears Nazir Razak, its chairman and brother of PM Najib, of wrongdoing over political funds
- Thai 10-yr bonds climb 8bps to 2.070%, highest since Feb. 29 amid rising U.S. rates and stronger than expected Thai data
- Philippine peso falls to weakest since May 10
- Philippines 1Q GDP rises 6.9% y/y in line with est.
- BSP Governor Tetangco says no need for further stimulus to the economy for now
- S. Korean won declines to lowest level in two months
- S. Korea recovery momentum not steady, Finance Minister Yoo says
- Yen drops lowest level since April 28
- Prime Minister Abe to make decision on tax hike after election, Kyodo reports
- March core machine orders rise 5.5% m/m vs est. -2%
- Japanese bought net 1.1t yen overseas debt last week, according to MOF
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Koji Fukaya (FPG Securities Co Ltd)
Nazir Razak (Bank CIMB Niaga Tbk PT)
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