Emerging Market Asia

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

Inflow remains 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

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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