Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Asia FX bears remain firm as risks from geopolitics, inflation persist - Reuters poll

Published 03/24/2022, 03:18 AM
Updated 03/24/2022, 03:21 AM
© Reuters. FILE PHOTO: Yuan banknotes are seen in this illustrative photograph taken in Beijing July 26, 2010. REUTERS/Jason Lee

© Reuters. FILE PHOTO: Yuan banknotes are seen in this illustrative photograph taken in Beijing July 26, 2010. REUTERS/Jason Lee

By Harshita Swaminathan

(Reuters) - Investors stayed bearish on most emerging Asian currencies and turned short on Thailand's baht for the first time in three months, as uncertainty from Russia's invasion of Ukraine and inflationary risks remained, a Reuters poll found on Thursday.

The Chinese yuan held on to long bets, though they slipped to their lowest in nearly six months, while short bets rose on the Philippine peso and the Malaysian ringgit, a fortnightly poll of 13 respondents showed.

Market participants turned short on the baht, as surging COVID-19 infections in China dashed hopes for a recovery in tourism revenue, while rising commodity prices also dented sentiment for the country being a net energy importer.

Across the region, currencies have been largely subdued as the U.S. dollar found support after the U.S. Federal Reserve raised interest rates by 25 basis points and officials signalled more aggressive measures to contain unexpectedly high inflation.

Meanwhile, rising oil prices also underpinned bearish mood in the region. While crude has slipped from a peak hit earlier this month, it still remains elevated enough to threaten bigger trade deficits and greater cost-pull inflation.

Singapore reported on Wednesday its fastest rise in headline prices in nine years, while central banks in Indonesia and the Philippines have noted risks from supercharged prices.

"Despite the backdrop of war, we expect the macro outlook to be driven primarily by inflation... Inflation will now get a further lift for at least a few months," Ajay Rajadhyaksha, global chairman of research at Barclays (LON:BARC), said in a note.

"Investors still believe that central banks such as the Fed will not have to over-hike into a recession to wrestle inflation lower. We agree with this view. But the risks are far greater than a month ago."

To that end, analysts at ING said in a note on Wednesday that they expect the Monetary Authority of Singapore to resort to additional tightening at its upcoming meeting in April.

Currencies of the region's major oil importers like India saw one of the highest short bets, while those on major oil exporter Indonesia were cut significantly.

The yuan, which had emerged as a safe-haven bet in the initial days of the Russia-Ukraine conflict and whose strength supports regional peers, has also come under pressure.

Rising COVID cases, however, mean the government may provide more stimulus, providing some support to the currency.

Bearish positions in the Taiwan dollar hit their highest since June 2019, despite the country's central bank surprising markets with an interest rate hike last week.

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 USD/ USD/ USD/ USD/ USD/ USD/ USD/ USD/ USD/

CNY KRW {{2034|SGD IDIDR TWD INR MYR PHP THB

24-Mar -0.1 0.98 0.19 0.04 1.16 0.99 0.12 1.4 0.46

-21 6

09-Mar -0.8 1.22 0.8 0.49 0.97 1.10 0.05 0.89 -0.0

-22 5 8

24-Feb -0.9 0.39 -0.7 -0.0 0.33 0.07 0.20 0.19 -1.0

-22 9 7 1 7

10-Feb -0.9 0.85 -0.9 0.46 -0.1 0.32 0.10 0.74 -0.3

-22 9 8 8 1

27-Jan -1.2 0.89 -0.6 0.12 -0.1 0.18 0.25 0.82 0.00

-22 9 7 7

13-Jan -0.7 0.97 0.22 0.20 -0.1 -0.2 0.28 0.71 0.61

-22 3 5 9

16-Dec -1.0 0.53 0.67 0.54 0.09 1.07 0.84 0.20 0.36

-21 7

02-Dec -0.8 1.06 0.58 0.15 0.00 0.47 0.28 0.26 0.71

-21 8

18-Nov -0.8 0.48 0.07 -0.7 -0.1 0.08 -0.0 0.24 0.12

-21 7 2 5 4

© Reuters. FILE PHOTO: Yuan banknotes are seen in this illustrative photograph taken in Beijing July 26, 2010. REUTERS/Jason Lee

04-Nov -0.5 0.63 -0.0 -0.4 0.10 0.54 -0.0 0.27 0.66

-21 1 9 1 7

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.