Emerging Market Asia

Stephen Innes SPI Asset Management

Yuan

USDCNY fixed at 6.8896 today, +51 pips from last fixing and -12 pips from the previous closing at 6.8908 at 16:30 Beijing time. While the US Tax reform details remain elusive, the bottom line should be dollar positive. We’ve seen a move higher for the dollar on regional currencies as dollar demand is starting to perk up. Investor confidence in China will be fraught with uncertainty through 2017 as US interest rates are expected to rise, and mainland officials deal with the perils of deleveraging the China money ball. Restoring financial stability will be high on the politburo’s agenda.

Ringgit

The Ringgit opened lower against the US dollar this morning as the greenback picked up steam after the US tax reform announcements on Wednesday. While the Ringgit continues to benefit from the BNM proposed liberalisation of onshore markets, the currency will continue to feel the headwinds from oil price uncertainty. Regardless of the oil patch musing, outflows have subsided, and I suspect the market will re-engage the MYR for no other reason than the domestic capital markets are very much undervalued about its ASEAN counterparts.

Rupee

Imports remain steady, and with rating upgrades perking up, we expect an increase in flow into the India Capital market that should keep the INR on a positive footing. However, with short dollar positioning a bit over stretched we could see some profit taking ahead of next week’s FOMC. With a positive interest rate carry environment, the short USDINR should remain favourable.

Won

Geopolitical headlines are weighing on the Won, and expectedly dealers were inclined to trim short dollar position. With Trump quashing the NAFTA chatter, it lessens the likelihood of Trade barrier escalation, which should be perceived as risk friendly for regional currencies

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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