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Most Asian FX bears firm; short bets on yuan at near 1-year high

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By Shashwat Awasthi

(Reuters) -Bearish bets on most Asian currencies firmed, a Reuters poll showed on Thursday, as signs of an economic recovery in the United States and rising coronavirus cases across the region dented the appeal of risk-sensitive assets.

Short bets on the Chinese yuan were at their highest since May, while those on the Philippine peso and the Thai baht inched up to remain at a near one-year high, a poll of 11 respondents showed.

Investors had turned short on all Asian currencies for the first time in a year last month as economic indicators increasingly suggest a recovery in the United States will outpace other developed nations, boosting U.S. Treasury yields and the dollar.

The greenback enjoyed its best performance in three years in the first quarter of 2021 and has continued to rise steadily since.

The poll responses, however, came before the Federal Reserve’s latest minutes on Wednesday. The central bank reaffirmed its loose monetary policy stance but offered no new catalysts, which took some shine off yields and the dollar.

Fresh waves of COVID-19 infections and record deaths in several Asian countries have also led to uncertainty in emerging market currencies.

The Indian rupee saw short positions rise to their highest level since May.

The Reserve Bank of India (RBI) on Wednesday kept interest rates at record lows but committed to a massive government bond purchase programme, following which the rupee suffered its worst day in more than one-and-a-half years.

“One possible catalyst for yesterday’s decision could be India’s daily case numbers of COVID-19, which have taken India to the unenviable position of the world’s most infected country on a daily basis,” said Robert Carnell, regional head of research, Asia-Pacific at ING.

“Low official and market rates have not done much to bring down bank lending rates, so it might be a push to suggest that this latest move will offset the COVID-19 impact by boosting lending and real activity.”

Market participants were the most bearish on the Indonesian rupiah since October.

Earlier this week, a senior official of Indonesia’s central bank said the currency was “too cheap” against the dollar and had been weakened by a spillover effect of U.S. fiscal policies.

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.

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):

Date CNY KRW SGD IDR TWD INR MYR PHP THB

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

25-Mar 0.30 0.65 0.46 0.45 0.50 0.05 0.54 0.11 0.54

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

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

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

28-Jan -1.08 -0.64 -0.79 -0.41 -0.68 -0.55 -0.3 -0.66 -0.36

14-Jan -1.21 -0.87 -0.83 -0.57 -0.89 -0.22 -0.3 -0.8 -0.5

10-Dec -1.53 -1.68 -1.11 -0.61 -1.6 -0.2 -0.53 -0.97 -0.87

26-Nov -1.43 -1.29 -1.01 -0.92 -1.08 -0.3 -0.75 -0.8 -0.66

12-Nov -1.28 -1.52 -0.99 -1.01 -1.08 -0.26 -0.44 -0.67 -0.8

29-Oct -0.86 -1.14 -0.49 0.09 -1.23 -0.07 -0.03 -0.09 -0.02

(Reporting by Shashwat Awasthi and Nikhil Kurian Nainan in Bengaluru; Editing by Amy Caren Daniel)

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