Bearish bets on most Asian currencies solidified on waning optimism of sooner-rather-than-later U.S. rate cuts, although the Indian rupee was an exception by racking up bullish bets for the first time in about six months, a Reuters poll showed on Thursday.
Most Asian currencies have been under pressure so far this year as the safe-haven U.S. dollar gained momentum on expectations that the U.S. central bank may not start rate cuts by March, dampening the appeal of riskier assets.
Market participants were the most bearish on the Malaysian ringgit for the 11th month in a row and firmed their short bets on the Chinese yuan, Indonesian rupiah, South Korean won and the Philippines peso, according to a fortnightly poll of 12 analysts.
Meanwhile, market participants erased their bullish bets to turn neutral on the Singapore dollar. They also reduced short positions on the Thai baht, which is the worst-performing emerging Asian currency in 2024, having lost about 2.3 per cent in just eight sessions.
Authorities in Thailand and the Philippines have started calls for rate cuts to ease the price pressures that have been piling on consumers.
“Low-yielding currencies like THB and MYR are likely to remain pressured,” Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking, said in a note.
“We see some scope for a quarter-high of 103-104 for the dollar index in Q1, before trending lower later the year.”
The poll was conducted before the U.S. inflation data, due later on Thursday, that will give investors further cues on the path of U.S. rate hikes.
One currency that seems to be charting its own path is the Indian rupee.
The partially convertible currency has risen 0.3 per cent in 2024, benefiting from the central bank’s intervention to prevent sharp moves, the promise of a stable government, significant fund inflows and with the country’s debt set to be part of key global indexes.
This has prompted traders to reverse their bets to turn bullish on the rupee for the first time since late July 2023.
“Sentiment has remained positive around Indian assets for a while and it was boosted by the outlook for greater political stability and recent news of inclusion of Indian government bonds into other global indices,” said Vijay Vikram, Societe Generale’s Asia macro strategist.
Besides India, Taiwan and Indonesia also have parliamentary polls this year, with investors likely to focus on policies for fiscal stability.
The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.
The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars.
The figures include positions held through non-deliverable forwards (NDFs).
The survey findings are provided below (positions in U.S. dollar versus each currency):
DATE USD/CNY USD/KRW USD/SGD USD/IDR USD/TWD USD/INR USD/MYR USD/PHP USD/THB
11-Jan-24 0.18 0.3 0.02 0.19 0.05 -0.15 0.72 0.09 0.03
14-Dec-23 0.02 -0.09 -0.22 -0.05 -0.33 0.34 0.58 -0.22 0.16
30-Nov-23 0.12 -0.05 -0.07 -0.05 -0.13 0.63 0.73 -0.1 -0.1
16-Nov-23 0.77 0.49 0.38 0.77 0.63 0.82 1.14 0.38 0.28
02-Nov-23 1.32 1.18 0.74 1.44 1.31 1.35 1.33 0.96 0.85
19-Oct-23 1.02 1.16 0.84 1.06 1.06 1.21 0.78 0.89 0.67
5-Oct-23 1.17 1.25 0.81 1 1.25 0.92 1.08 0.75 1.03
21-Sep-23 1.29 0.94 0.61 0.84 0.98 1 1.03 0.64 0.83
7-Sep-23 1.28 1.01 0.3 0.65 0.95 0.79 0.86 0.55 0.57
