INSIDE ASIA: Currencies Drop on Firm USD, Yuan Fixed at 2-Mo Low
(Bloomberg) -- Most Asian currencies decline as dollar heads for second day of gains and PBOC cuts yuan fixing to weakest in 2 months. S. Korea central bank holds the policy rate unchanged at record low of 1.5%.
- Asian currencies retreated today mainly on the back of a firmer USD, with market reassessing the extent of rate hikes priced following recent Fed speeches, Khoon Goh, senior FX strategist at ANZ says in interview
- Weaker yuan fix, at lowest since early March, also likely weighed on Asian currencies
- Slight rise in oil prices not enough to prevent the ringgit from opening weaker
- Philippine peso is giving back some of its gains following the post-election relief rally
- Korean won trims early losses after BOK governor Lee says current rate is not insufficient to support economy
- BOK held the benchmark interest rate unchanged for an 11th consecutive month and said it will closely monitor progress of corporate restructuring and changes in monetary policies of major countries
- Further easing more likely than not in coming mos. amid rising pressure on BOK to support Korea’s economy and aid corporate restructuring: Capital Economics
- Malaysian ringgit set to snap two-day gain after overnight increase in Dollar Index and ahead of local GDP
- 1Q GDP growth est. 4.0%; data due 12pm local time
- Malaysia’s 5-year interest-rate swaps may extend losses toward levels last seen in late 2013 if 1Q is confirmed as weakest quarter since 2010: analysis
- China yuan weakens after PBOC sets reference rate at weakest level since March 4 as dollar strengthened overnight
- New loans, M2, industrial production data due before end of weekend; industrial output expected to ease slightly as govt eyes reforms, see PREVIEW
- Country may be steering a “managed depreciation” of its currency despite allowing the fixing to be more predictable to enhance the communication channel: Commerzbank
- The market is getting pessimistic about the yuan, as recent data suggest that the economy slowed in April and the dollar resumed strength,’’ said Banny Lam, Hong Kong-based co-head of research at Agricultural Bank of China International Securities
- Aussie drops for second day on weak sentiment in Asian equity markets and broad dollar strength
- Morgan Stanley suggests being structurally short AUD/JPY, in note received today; currencies with substantial foreign funding need to face devaluation risks as asset volatility increases
- Yen gains; USD/JPY remains below 109.85, conversion line on weekly ichimoku chart
- Prime Minister Abe is shifting his economic policies to the left in bid to broaden his appeal ahead of election this summer
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HALISTER1Source: BFW (Bloomberg First Word)
People Khoon Goh (Australia & New Zealand Banking Group Ltd)
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