Lee Hardman, Currency Analyst at MUFG, suggests that Asian currencies have weakened modestly against the US dollar in the Asian trading session undermined in part by the solid non-farm payrolls report and another large draw down in China’s FX reserves. Key Quotes “The report revealed that China’s FX reserves declined by a further USD99.5 billion in January taking the cumulative decline to just over USD760 billion since the peak from June 2014. The pace of the draw down has accelerated over the last three months highlighting that the Chinese authorities are having to intervene more aggressively to dampen downward market pressure from more elevated capital outflows. The smaller drawdown in January relative to December may show that efforts to stem capital outflows are having some effect. The PBoC also released its quarterly monetary policy report over the weekend in which it cited concern that across-the-board cuts to banks’ reserve requirement ratio may increase renminbi depreciation pressure. Instead, the PBoC stated that it seeks to implement “targeted reserve ratio cut” measures to support economic restructuring. Overall, the reports support our view that the Asian currencies are likely to weaken further in the year ahead.” For more information, read our latest forex news.