By Sameer Manekar
(Reuters) – Analysts have strengthened their bearish positions on most Asian currencies as U.S. interest rates and a resilient dollar are likely to continue hurting local units, a Reuters poll showed on Thursday.
The Indonesian rupiah and Philippine peso were the most shorted currencies in the region, with bearish bets at both multi-week highs, a biweekly poll of 10 analysts showed.
The comments came ahead of the United States’ May inflation report, which showed prices remaining flat, and the Federal Reserve’s monetary policy meeting, where the central bank delayed the start of interest rate cuts until the end of December. However, investors in contracts tied to the Fed’s interest rate kept their expectations of a quarter-percentage-point cut in September and December intact.
“We still see upside risks to the DXY (), given that we are in an uncertain transition period regarding (US) inflation and markets may remain cautious,” Maybank analysts said in a note on Thursday.
“The Fed staying higher for longer won’t do Asian currencies any good either, as the dot suddenly indicates only one rate cut this year.”
The Indonesian rupiah, one of the worst performing currencies in the region so far this year, has seen analysts build up their short bets throughout the year as external factors and corporate dividend outflows put pressure on the currency.
“We are more skeptical of the THB (baht) and IDR (rupiah) in the near term due to continued dividend outflows,” HSBC analysts said.
“As long as the IDR remains under pressure – which is very likely in the short term, given dividend outflows until the end of July, a smaller trade surplus and a lack of portfolio inflows – we cannot rule out that BI (Bank) will pay more interest to increase. Indonesia).”
Short bets on the Philippine peso moved higher as the local central bank remains of the view that interest rates could be cut as early as August despite a rise in inflation.
“Signaling a rate cut before the Fed will likely result in increased depreciation pressure for the PHP,” HSBC analysts said.
Meanwhile, analysts have turned bearish on the Indian rupee, one of the region’s best-performing currencies so far this year, as external factors such as high interest rates and geopolitical tensions in the Middle East put pressure on the currency.
Bearish views also rose for the South Korean won, Taiwan dollar and Singapore dollar, while they were marginally lowered for the Chinese yuan and Thai baht.
The Asian currency positioning poll focuses on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese Yuan, the South Korean Won, the Singapore Dollar, the Indonesian Rupiah, the Taiwan Dollar , the Indian rupee, the Philippine peso and the Malaysian ringgit. and 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 that the market is significantly long in US dollars.
The figures include positions via non-deliverable forwards (NDFs).
Below are the survey results (US dollar positions versus each currency):
DATE
13-June-24 0.95 0.87 0.62 1.22 0.64 0.37 1.00 1.23 0.92
30-May-24 1.05 0.72 0.33 0.94 0.53 0.00 0.81 1.19 1.00
16-May-24 1.05 0.96 0.35 0.96 1.02 0.39 1.23 1.29 1.00
2-May-24 1.25 1.61 0.89 1.39 1.40 0.49 1.46 1.44 1.39
18-April-24 1.25 1.59 0.80 1.32 1.24 0.43 1.42 1.19 1.28
4-April-24 1.18 1.09 0.42 1.13 1.17 0.00 1.15 0.62 1.35
21-Mar-24 0.92 0.82 0.33 0.60 0.92 -0.54 1.12 0.47 1.13
7-Mar-24 0.84 0.54 0.25 0.53 0.64 -0.59 1.14 0.52 1.05
22-Feb-24 0.70 0.40 0.20 0.20 0.70 -0.40 1.30 0.30 1.10
8-Feb-24 0.40 0.39 0.41 0.40 0.32 -0.17 1.07 0.28 0.72
