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Investors cut long positions in Asian currencies, bets on yuan cut in half: Reuters poll By Reuters

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Investors cut long positions in Asian currencies, bets on yuan cut in half: Reuters poll By Reuters
© Reuters. South Korean won, Chinese yuan, and Japanese yen bills are seen on US $ 100 bills in this file photo illustration taken on December 15, 2015. REUTERS / Kim Hong-Ji // Illustration / Archives

By Nikhil Nainan

BENGALURU (Reuters) – Long bets were cut in most emerging Asian currencies, a Reuters poll showed on Thursday, as investors weigh the possibility of tighter currency adjustments as the US recovery.

All 13 responses came ahead of the Federal Reserve’s policy meeting late on Wednesday, where it was surprised to note that it could raise interest rates starting in 2023, a faster pace than initially assumed.

Emerging markets have not fared well in the past with the prospect of US interest rate hikes, and with the Fed opening the door to an accelerated timetable to remove monetary stimulus fueled by the pandemic, it could absorb funds from riskier assets and strain the central Asian economy. banks to tighten faster.

For now, investors remain largely bullish on emerging currencies in Asia, with long bets on the Taiwan dollar and the Indonesian rupiah slightly up from two weeks ago.

The central banks of the two countries will meet later on Thursday and are expected to leave official rates unchanged at record lows, but may offer further comment on their own calendar and economic outlook in light of the Fed’s radical change.

The Taiwan dollar has appreciated sharply since late March as the economy soars on the work-from-home trend that fuels global demand for technology.

The governor of the Bank of Indonesia promised to keep rates low and liquidity in abundance until inflationary pressure is in place, but also warned that local bond markets, susceptible to external flows, may be affected by changes in US policy.

Long bets on the rupee reached their highest level since February.

The aggressive message from the Fed sent the US dollar to its highest level in about two months and triggered declines in the Asian monetary space on Thursday, including a drop of more than 0.5% per rupee.

Emerging markets will “face headwinds in the coming months” and “will likely sell in absolute terms and underperform their DM (developed market) peers,” said Arthur Budaghyan, chief emerging markets strategist at BCA Research. .

Generally speaking, long bets on the Chinese yuan were down after they hit a six-month high in the latest survey. It continues to intervene by the central bank to warn against speculative bets on the currency after its recent rally.

ING, in a note, said that the rise of the yuan will slow down from now on.

Bullish bets on the Singapore dollar, the South Korean won and the Philippine peso were cut.

For the Indian rupee, which performed well in May, long bets were down as well.

The “significant shock to economic sentiment in the second wave suggests that the recovery will be delayed,” ING analysts said, adding that it will limit any significant rise in the rupee.

The Asian Currency Positioning Survey focuses on what market participants believe are current market positions in nine Asian emerging market currencies: South Korean won, Singapore dollar, Indonesian rupiah, Taiwanese dollar, Indian rupee, Philippine peso , Malaysian ringgit and Thai baht. .

The survey 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.

Figures include positions held through non-deliverable forwards (NDF).

The results of the survey are provided below (positions in US dollars against each currency):

Date {{2034 | SGD ID

June 17 -0.63 -0.36 -0.49 -0.50 -0.58 -0.21 -0.05 -0.31 0.20

June 3 -1.34 -0.51 -0.55 -0.40 -0.44 -0.71 0.32 -0.66 0.37

May 20 -0.33 0.43 0.37 -0.06 0.33 -0.03 0.26 -0.22 0.81

06-May -0.52 -0.39 -0.58 0.31 -0.59 0.86 -0.04 -0.35 0.50

April 22 -0.17 -0.23 -0.44 0.56 -0.38 0.75 -0.03 -0.37 0.58

08-April 0.72 0.48 0.30 0.59 0.77 0.20 0.46 0.36 0.91

March 25 0.30 0.65 0.46 0.45 0.50 0.05 0.54 0.11 0.54

March 11 -0.06 0.55 0.55 0.22 -0.10 -0.37 0.50 0.09 0.49

Feb 25 -1.03 -0.32 -0.57 -0.51 -0.58 -0.96 -0.13 0.01 -0.37

Feb 11 -0.91 -0.24 -0.29 -0.36 -0.63 -0.53 -0.04 -0.47 -0.41

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