RBI and BoK likely to be on hold

The RBI and BoK will both announce policy this week, and our baseline case is for both to keep rates on hold. Falling inflation will allow the RBI to cut the repo rate by 25bp in Q2, but between April and June, we are forecasting a cut in June.

Surprise easing moves by these central banks would likely lead to differing outcomes for the INR and KRW - a surprise cut by BoK would likely drive the KRW weaker, but in contrast, an earlier-than-expected easing by the RBI would be beneficial for the INR given more active foreign participation in the equity market over the fixed income market in India. 

Additionally, a number of countries will report inflation data (China, Taiwan, Philippines) and exports data (India, Philippines and Taiwan) for March.

According to Barclays the subdued consumer price and exports growth would likely give central banks more reasons to stay easy on monetary policy and to resist currency appreciation. 

"In China, we expect CPI (Barclays and cf: 1.3% y/y; cf: last: 1.4%) and PPI (Barclays and cf: -4.8% y/y; cf: last: -4.8%) to remain subdued, reflecting both weak domestic demand and low energy prices. Money and new loans growth rates are also likely to remain relatively low on a y/y basis, consistent with the weak inflation profile", Said Barclays in a report on Monday