June 5th, 2008

USD continues to be bid on Bernanke's comments; Dollar should not be Fed's concern
O/N Fed funds wont fall below 2% unles seconomy dies

KRW: Bid across the curve, spot near previous level where BoK sold USD
CNY: NDF curve jumped higher on USD global strength
INR: RBI sold dollars around 42.95 which prevented spot from jumping; market watching if they defend 43.00
- govt hiked fuel prices about 10% to curb losses of state-owned oil refiners with risks of political tensions and inflation
- RBI said would allow oil firms to hedge on overseas exchanges and increased investment limits on overseas energy companies
- 10% was much lower than 15-22% asked by oil companies;
- expect RBI to steer clear of rate hikes, instead using CRR still by 50bp
- communist allies calling for protests against the hikes
IDR: BI Hiked rates by 25bp to 8.5% and moved policy rate to o/n from 1moth SBI

Singapore
Pair well bid lal day on weak EUR; tried to trigger stops above 1.3700 bt offers came in on any EUR recovery

Thailand
Pair still heading higher, offshore curve remains well bid with daily funding coming back to positive territory
People's Alliance for Democracy (PAD) protests have lasxted 2 weeks; unless Samak reacts with forcel should fizle out
Thaksin had extended an olive branch to Privy Council Prem Tinsulanond, fitting mediator was Gen Anupong Paochinda, the army chief who's mother's funeral provided the veue
PM Office Minister Jakraprob Penkhair resigned around same time for alleged anti-monarchy comments


South Africa
Expect 7.49 - 7.82 trading with SARB next week and not too much data on forefront
Calm past 3 sessions should not be misconstrued as quiet, but rather "calm before the storm"
Mugabe's decision to suspend relief of CARE => massive migrants to SA => more domestic political riots
With Eskom, violence, and impending economic slowdown, onus will be on Tito to reassure investors of price stability => preventing volatility in the c/a
NERSA decision moved to 18Jun from 06Jun but complicated nature of tariff hike should make for a lengthy adjustment process;
Levels: 7.8710, 100% fib, 7.7910- 76.4% fib, 7.7420 - 61.8%, 7.8445 - upper end of bollinger band; 100d - 7.7042