By Roushni Nair
(Reuters) – Analysts have turned bearish on most Asian currencies, with short bets on the Indian rupee at a one-year high, as expectations that the Federal Reserve would cut rates less aggressively strengthened the dollar and took the shine off riskier took away Asian assets.
Short positions in the South Korean won, the Philippine peso and the Indonesian rupiah are at their highest since July 25, a biweekly poll of 11 analysts showed on Thursday.
Bullish bets on the Chinese yuan, Singapore dollar, Malaysian ringgit and Thai baht also fell significantly from early October.
Rising demand for the dollar amid declining expectations of excessive Fed rate cuts and uncertainty over the US elections has weakened investor confidence in Asian currencies.
The , which measures the dollar against six major rivals, is up 3% year to date since September 30. The index is currently trading at 103.57, a high last seen in late July. [USD/]
In India, the rupee fell above 84 per US dollar last week – a level the Reserve Bank of India had defended for more than two months – as the recent spike in oil prices could increase net importer bills, and as the exodus of foreign money from the domestic stock market put pressure on local unity.
The responses to the poll came before central banks in Thailand, the Philippines and Indonesia made interest rate decisions on Wednesday.
The Bank of Thailand and Bangko Sentral ng Pilipinas (BSP) cut interest rates, while Bank Indonesia maintained the status quo.
“While fundamental data shows that rates should now be cut towards neutral, the weakening of the peso should keep the BSP cautious about the pace of easing, and cautious about moving faster than the Fed,” said Eugenia Victorino , head of Asia strategy at Skandinaviska Enskilda Banken. .
In Thailand, despite government support for interest rate cuts, the baht remains the second best performing currency in Asia this year, up almost 3% so far this year and surpassed only by the Malaysian ringgit.
Oil price volatility disrupted investor confidence in the ringgit – also called a proxy for the yuan due to its trade ties with China – while Malaysia stands out as the only net oil and gas exporter among major emerging Asian economies. [O/R]
Meanwhile, short positions on the Taiwan dollar were at their highest level since August 8.
Confidence in Taiwan’s export-reliant, tech-heavy economy came under pressure after a report said the Biden administration was considering restricting sales of advanced artificial intelligence processors to some countries.
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, the 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 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
17-Oct-24 -0.43 0.26 -0.44 0.04 0.24 0.67 -0.40 0.26 -0.28
03-Oct-2024 -1.14 -0.79 -1.26 -1.08 -0.59 -0.04 -1.18 -0.70 -1.45
19-Sep-2024 -0.67 -0.90 -1.12 -1.18 -0.66 0.33 -1.30 -1.10 -1.33
05-Sep-24 -0.85 -1.09 -1.26 -1.05 -0.77 0.21 -1.46 -1.00 -1.22
22-Aug-24 -0.62 -0.93 -1.08 -1.26 -0.70 0.21 -1.57 -1.03 -1.16
08-Aug-24 -0.02 0.05 -0.61 -0.02 0.59 0.60 -0.78 -0.29 -0.57
25-July-24 1.07 0.79 -0.33 0.35 0.86 0.12 0.39 0.43 0.02
11-Jul-24 1.05 0.87 0.06 0.73 0.68 0.22 1.03 0.86 0.51
27-Jun-24 1.34 1.28 0.80 1.49 0.88 0.46 1.00 1.37 0.91
13-Jun-24 0.95 0.87 0.62 1.22 0.64 0.37 1.00 1.23 0.92
