Home ForexArticles Asian currency bears hold firm as strong dollar, China woes dent sentiment: Reuters poll By Reuters

Asian currency bears hold firm as strong dollar, China woes dent sentiment: Reuters poll By Reuters

by SuperiorInvest

© Reuters. FILE PHOTO: In this illustrative photo taken on September 29, 2022, Chinese yuan and US dollar bills are seen. REUTERS/Florence Lo/Illustration/File photo

By Rishav Chatterjee

(Reuters) – Short bets on most Asian currencies eased marginally but remained firmly in bearish territory, according to a Reuters poll released on Thursday, as hopes for an early U.S. interest rate cut faded They kept the dollar buoyant and market volatility in China, the regional power, slowed investors. trust.

Bearish bets on the South Korean won, the Indonesian rupiah and the Taiwanese dollar fell, while those on the Chinese yuan and the Singapore dollar rose, according to a biweekly survey of 10 respondents.

The U.S. dollar, which is measured against a basket of currencies, jumped to a nearly three-month high this week as investors scaled back bets that the Federal Reserve would begin cutting interest rates as early as March. [FEDWATCH] [USD/]

“The US Federal Reserve does not appear to be in a rush to cut rates, disappointing markets, but given the recent rally, it would take a series of adverse developments for the Fed to act quickly,” the analysts said. from DBS.

Strong US economic data, including the closely watched jobs report, which beat market expectations, reinforced the view that a rate cut in March was highly unlikely.

Meanwhile, a series of disappointing economic data from China, Asia’s largest economy, including inflation, services and manufacturing activity, along with stock volatility, kept analysts unmoved in their bearish views on currencies. the region.

Short bets on the yuan are now at their highest level since mid-November last year.

“Sentiment around the Chinese yuan is more likely to depend on any new policy announcements aimed at supporting Chinese stock markets ahead of the Lunar New Year,” said Wei Liang Chang, currency and credit strategist at DBS Group (OTC: ).

Short positions in the Thai baht and Philippine peso also decreased.

Thailand’s central bank left the country’s key interest rate unchanged on Wednesday, defying government pressure to reduce borrowing costs to revive faltering growth.

“While we recognize downside risks to the outlook, we continue to expect the Bank of Thailand to keep its policy rate stable throughout 2024,” HSBC analyst Aris Dacanay wrote in a note.

Meanwhile, the Indian rupee was the outlier among the rest, with investors maintaining their bullish views on the currency, which has outperformed its peers so far this year.

“Of late, the INR has seen a small boost on the back of global fund buying and an improvement in the trade deficit,” Maybank analysts wrote.

The Indian rupee has gained 0.3% so far this year, making it the only currency in the region in positive territory.

“Our view on INR over the medium term remains largely positive as we see growth and inflation dynamics continuing to support INR,” Maybank added.

The Asian Currency Positioning Survey focuses 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 , the Taiwanese dollar, the Indian rupee, the Philippine peso and the Malaysian peso. ringgit and the Thai baht.

The survey uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates that the market is significantly long US dollars.

The figures include positions held through non-deliverable forward contracts (NDF).

The survey results are provided below (US dollar positions against each currency):

DATE

8-Feb-24 0.4 0.39 0.41 0.4 0.32 -0.17 1.07 0.28 0.72

Jan 25, 24 0.37 0.9 0.28 0.51 0.49 -0.18 1.07 0.5 0.9

Jan 11, 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

Nov 30, 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

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