CNY (6.461) ▼

▪ CNY moved in a tight range of between 6.456 - 6.511 before closing last month's session 0.07% lower against the USD, despite a slightly weaker USD index and higher foreign capital inflows into China. To note, the yuan breached the 6.50 barrier on July 27 for the first time since April due to China's tech rout.

▪ CNY may likely trade closer to or slightly above the 6.50 level against the greenback in August amid the current COVID-induced risk-off mode. To add, investors will be eyeing the development of US-CN relations, Jackson Hole meeting outcome and key China economic data.

JPY (109.720) ▼

▪ JPY strengthened in July against a weakened USD, following the US FOMC meeting. Japan registered improved economic data, with June’s unemployment rate at 2.9% (May: 3.0%) and industrial production rebounding 6.2% MoM (May: -6.5%). However, this was capped by concerns regarding rising COVID-19 cases as the Olympic games commenced.

▪ JPY may depreciate this month, as Japan recently expanded its state of emergency amid a spike in COVID19 infections across the country. Prime Minister Yoshihide Suga warned of the rapid spread of the Delta variant, even as the country’s vaccination rate remained low relative to other developed nations.

MYR (4.221) ▼

▪ MYR depreciated against the USD for the third straight month, falling to its weakest level in one year, primarily due to rising domestic COVID-19 cases, which continued to record five-digit figures since July 13.

▪ The direction of the local note for this month will be heavily influenced by the domestic political landscape and COVID-19 situation as more people are fully vaccinated. The MYR may continue to weaken if the Fed offers any tapering hints at its Jackson Hole symposium.

IDR (14,463) ▼

▪ IDR depreciated in July, mainly due to COVID-19 resurgence and its movement restrictions amid fears of the Delta variant. Meanwhile, the government and Bank Indonesia slashed GDP growth to reflect the impact of the extended movement curbs on the domestic economy.

▪ IDR is expected to further depreciate in August if the COVID-19 situation worsens and partial lockdown continues to be extended again, while the US Fed may signal its QE tapering at the Jackson Hole symposium.

THB (32.900) ▼

▪ THB depreciated in July, its lowest since April 2020, as new COVID-19 daily cases brought by the Delta-strain posted a record high since the pandemic began. Meanwhile, the government expanded lockdown areas and imposed tighter restrictions to curb the virus infections, which will likely undermine its growth recovery.

▪ THB may depreciate further in August if the lockdown continues to be extended, in order to flatten the curve, while the country struggles to speed up its inoculation campaign due to vaccine supply shortage.

Source: Kenanga Research - 2 Aug 2021