Asian currencies favored by investors as US interest rate expectations change – Reuters survey

Investors Bullish on Most Asian FX as US Interest Rate Bets Shift

Investors Turn Bullish on Emerging Asian Currencies

Investors have turned bullish on most emerging Asian currencies, with the prospects of a potential end to U.S. interest rate hikes leading to weakness in the greenback and triggering a rush into riskier assets in the region, a Reuters poll showed on Thursday.

South Korean Won, Taiwanese Dollar, and Philippine Peso at Highs

Bullish bets on the South Korean won, Taiwanese dollar, and Philippine peso were at their highest since Feb. 9, while long positions on the Singapore dollar and Indonesian rupiah stood at a four-month high, the fortnightly survey of 12 respondents showed.

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Market Participants Betting on Prolonged Weakness in US Dollar

Market participants are betting on prolonged weakness in the U.S. dollar, taking cues from a spate of economic data that reinforced optimism that the U.S. Federal Reserve is probably done raising interest rates this cycle, with markets even anticipating a cut in mid-2024.

Asian Currencies Recovering Ground

The U.S. dollar, which measures the U.S. currency against six rivals, has lost nearly 0.6% so far in November, helping emerging Asian currencies recover some ground.

Potential Rebound in US Dollar

Poon Panichpibool, a markets strategist with Krung Thai Bank, however, said there is still a possibility of a rebound in the dollar depending on the risk of data in the U.S. coming in stronger than expected.

Strong Performances by Taiwan Dollar and Korean Won

Back in Asia, the Taiwan dollar has strengthened over 3.5% so far in November, snapping a seven-month losing streak. The unit is set to log its best month in a year. The Korean won, too, has performed considerably well, adding over 4% in value. The unit is set to log its best month since last November.

Investors Bearish for Indian Rupee, Chinese Yuan, and Malaysian Ringgit

Investors, however, remained bearish for the Indian rupee, Chinese yuan, and the Malaysian ringgit despite an improvement in sentiment.

Focus on Analysts and Fund Managers’ Market Positions

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.

Poll Findings

  • 30-Nov-23 0.12 -0.05 -0.07 -0.05 -0.13 0.63 0.73 -0.10 -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 1.00 1.25 0.92 1.08 0.75 1.03
  • 21-Sep-23 1.29 0.94 0.61 0.84 0.98 1.00 1.03 0.64 0.83
  • 7-Sep-23 1.28 1.01 0.30 0.65 0.95 0.79 0.86 0.55 0.57
  • 24-Aug-23 1.42 0.79 0.34 0.77 1.00 0.84 1.18 0.92 0.50
  • 10-Aug-23 0.74 0.68 0.28 0.60 1.12 0.62 0.98 0.75 0.49
  • 27-Jul-23 0.77 0.19 -0.22 -0.14 1.17 -0.06 1.15 0.14 0.15

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