Image: Reuters Berita 24 English - A Reuters survey revealed that bearish bets on various Asian currencies set a record high in the face of...
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| Image: Reuters |
Berita 24 English - A Reuters survey revealed that bearish bets on various Asian currencies set a record high in the face of rising US interest rates, which bolstered the dollar, while recurrent COVID-19 lockdowns threatened to hamper China's economic recovery.
According to the fortnightly poll of ten respondents, short positions in the South Korean won, Singapore dollar, Malaysian ringgit, and Philippine peso reached new highs.
The dollar rose to a two-decade high this week as the Federal Reserve raised interest rates more aggressively in response to scorching inflation statistics in the United States.
The Fed raised interest rates by 75 basis points (bps) on Wednesday, which markets interpreted as a proactive attempt to reduce inflationary pressures, boosting Asian currencies. The results of the survey were compiled prior to the Fed's decision.
"We expect investor sentiment to remain erratic and financial market conditions to remain choppy through 3Q22," Selena Ling, head of research and strategy at OCBC, wrote in a note, adding that the Fed's rate hikes this year might range from 50 to 75 basis points.
The Federal Reserve's interest rate choices have long served as a benchmark for local central banks in determining policy. Given the slow pace of economic recovery in emerging Asia following COVID-19, the tempo of hawkish policy among regional central banks may differ.
China's rigorous zero-COVID policy has complicated matters further, with key cities slipping in and out of lockdowns, heightening concerns about a stuttering recovery in the world's second-largest economy.
"Unless China alters its COVID-zero policy, I believe China will face repeated Omicron lockdowns this year," said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA.
"China's growth outlook remains tough, to say the least, and will become considerably more so if important export markets slow as monetary policy tightens."
Short holdings in the Chinese yuan remained close to an all-time high set last month.
Bearish bets on the Indonesian rupiah reached their highest level since April 2020. This week, the currency fell to its lowest level since October 2020.
Market players were also pessimistic about the Indian rupee, which fell to a new low on Monday, with short holdings reaching a three-and-a-half-year high.
According to data released this week, India's wholesale prices rose at their quickest annual rate in more than 30 years, prompting expectations for future rate hikes by the central bank.
The Asian currency positioning poll examines analysts' and fund managers' perceptions of 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 Thai baht.
On a scale of minus 3 to plus 3, the poll uses estimates of net long or short holdings. A plus three score suggests that the market is significantly long in US dollars.
Non-deliverable forward positions are included in the figures (NDFs).
The following are the results of the survey (positions in US dollars versus each currency):
DATE (USD/CNY) USD/USD/USD/S USD/I USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/USD/
NY KRW GD DR TWD INR MYR PHP HB NY KRW GD DR TWD INR MYR PHP HB
16-Jun-22 1.54 1.79 1.35 1.33 1.23 1.66 1.67 1.7 1.34 1.54 1.79 1.35 1.33 1.23 1.66 1.67 1.7 1.34
02-Jun-22 1.22 0.56 0.38 0.90 0.73 1.18 1.06 0.59 0.54 1.18 1.06 0.59 0.54
19-May-22 1.90 1.55 1.07 1.19 1.63 1.35 1.53 1.15 1.56 1.90 1.55 1.07 1.19 1.63 1.35 1.53 1.15 1.56
05-May-22 1.75 1.50 0.73 0.56 1.49 1.04 1.47 1.09 1.33 1.75 1.50 0.73 0.56 1.49 1.04 1.47 1.09 1.33
21-Apr-22 0.10 1.07 -0.17 -0.03 0.94 0.75 0.89 1.00 0.71 0.10 1.07 -0.17 -0.03 0.94 0.75 0.89 1.00 0.71
07-Apr-22 -0.41 0.99 -0.46 -0.05 0.81 0.63 0.32 0.53 0.31 -0.41 0.99 -0.46 -0.05 0.81 0.63 0.32 0.53 0.31 -0.41 0.99 -0.46 -0.05
-0.16 0.98 0.19 0.04 1.16 0.99 0.12 1.40 0.46 -0.16 0.98 0.19 0.04 1.16 0.99 0.12 1.40 0.46 -0.16 0.98 0.19 0.04 1.16 0.
-0.85 1.22 0.8 0.49 0.97 1.1 0.05 0.89 -0.08 09-Mar-22 -0.85 1.22 0.8 0.49 0.97 1.1 0.05 0.89 -0.08
