Asian FX Bears Hold Ground Amid Dollar Strength and China Woes
Short Bets on Asian Currencies Remain Firmly Bearish
Short bets on most Asian currencies eased marginally but remained firmly in the bearish territory, a Reuters poll found on Thursday. The diminishing hopes of an early U.S. interest rate cut kept the dollar buoyant. Market volatility in China also dampened investor confidence.
U.S. Dollar and Economic Data
The U.S. dollar, which measures itself against a basket of currencies, jumped to a near three-month high this week. Investors slashed bets that the Federal Reserve would begin cutting interest rates as early as March. Robust economic data from the United States, including the closely watched jobs report, reinforced the view that a rate cut in March was highly unlikely.
Chinese Economy and Market Volatility
Disappointing economic data from China, such as inflation, services, and manufacturing activity, coupled with volatility in equities, kept analysts unmoved on their bearish views on the region’s currencies. Short bets on the yuan now stand at their highest level since mid-November last year.
Regional Currency Positions
Short positions on the Thai baht and Philippine peso eased as well. Thailand’s central bank kept the country’s key interest rate unchanged on Wednesday, defying government pressures to cut down on borrowing costs to revive faltering growth.
Indian Rupee Outlier
Meanwhile, the Indian rupee was the outlier among the pack, with investors maintaining their bullish views on the currency, which has outperformed its peers so far this year. The Indian rupee has gained 0.3% so far this year, the only currency in the region in the positive territory.
Asian Currency Positioning Poll
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 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):
8-Feb-24 0.4 0.39 0.41 0.4 0.32 -0.17 1.07 0.28 0.72
25-Jan-24 0.37 0.9 0.28 0.51 0.49 -0.18 1.07 0.5 0.9
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
2-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
