Image: Reuters Berita 24 English - According to a Reuters poll released on Thursday, bearish bets on almost all Asian currencies increased ...
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| Image: Reuters |
Berita 24 English - According to a Reuters poll released on Thursday, bearish bets on almost all Asian currencies increased to fresh multi-year highs as concerns about an oncoming recession fueled by quickly rising interest rates to combat sky-high inflation weighed on investor mood.
A biweekly survey of 13 respondents found that short positions on the Thai baht, the Philippine peso, and the Singapore dollar were at their highest levels since 2018, when data became available.
Since late April, analysts have generally not held net long bets on any Asian currencies.
A worsening COVID-19 scenario in China, which pursues a "zero-COVID" approach, stoked fears that Chinese tourists would delay their return to Thailand, which led to the strongest strengthening of bearish bets on the baht.
The Chinese yuan, which is regarded as a safer bet among Asian currencies, continues to be unfavourably viewed.
Following its 17-year low earlier this week, the Philippine peso became the most shorted Asian currency as investors were concerned that the Bangko Sentral ng Pilipinas' (BSP) rate hikes would still put the country behind other Asian nations in the fight against inflation.
"The Philippines is a net importer of food and has a significant food trade imbalance, which makes PHP unique in this context. That makes the nation extremely vulnerable to increased food prices in the wake of the pandemic "said IG analyst Daniel Dubrovsky.
At the end of the day, the Federal Reserve is still much more aggressive, despite recent improvement in hawkish BSP predictions.
The survey results were compiled before the BSP shocked the markets on Thursday by raising its benchmark interest rate by an unexpected 75 basis points.
In recent months, confidence in the currencies of these nations has declined due to concerns that central banks, notably those of the Philippines and Thailand, may tighten policy far more slowly than the Federal Reserve.
The Bank of Thailand is expected to hike the key rate at its upcoming meeting on August 10 despite Thailand's current record-low key rate.
The midpoint of the currency's exchange rate target band was also recentered earlier in the day by Singapore's central bank in another off-cycle action.
Analysts increased their short bets on the Indian rupee, which has fallen to new lows each day this week despite efforts by the central bank to increase inflows of foreign currency.
India, like many other economies, is struggling with rising inflation despite tightening policies and restrictions on wheat exports.
The Asian currency positioning survey focuses on the current market positions of 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 from -3 to +3, the survey uses estimates of net long or short holdings. A score of plus three means the market has a sizable long position in US dollars.
The positions held through non-deliverable forwards are included in the figures (NDFs).
The survey results are listed below, with positions in the US dollar relative to each currency:
DAT US Dollars, US Dollars, US Dollars, US Dollars,
E KRW SGD INR TWD INR MYR PHP THB IDR TWD INR
14- 1.07 1.84 1.44 1.59 1.76 1.98 1.68 2.06 1.78
Jul
-22
30- 1.09 1.69 1.08 1.50 1.15 1.80 1.63 2.05 1.39
Jun
-22
16- 1.54 1.79 1.35 1.33 1.23 1.66 1.67 1.70 1.34
Jun
-22
02- 1.22 0.56 0.38 0.90 0.73 1.18 1.06 0.59 0.54
Jun
-22
19- 1.9 1.55 1.07 1.19 1.63 1.35 1.53 1.15 1.56
May
-22
05- 1.75 1.5 0.73 0.56 1.49 1.04 1.47 1.09 1.33
May
-22
21- 0.1 1.07 -0.1 -0.0 0.94 0.75 0.89 1.00 0.71
Apr 7 3
-22
07- -0.4 0.99 -0.4 -0.0 0.81 0.63 0.32 0.53 0.31
Apr 1 6 5
-22
