By Roushni Nair
Nov 30 (Reuters) – Investors turned bullish on most emerging Asian currencies as prospects of a possible end to US interest rate hikes led to weakness in the greenback and sparked a rush to riskier assets in the region, a Reuters poll showed on Thursday.
Bullish bets on a South Korean win KRW=KFTCTaiwan dollar TWD=TPand Philippine peso PHP= were highest since February 9, while long positions on the Singapore dollar SGD= and Indonesian rupiah IDR= stood at a four-month high, the two-week survey of 12 respondents showed.
Market participants are betting on prolonged weakness in the US dollar, taking cues from a set of economic data that have boosted optimism that the US Federal Reserve is likely to be done raising interest rates this cycle, with markets even predicting a cut in mid-2024.
The dollar rate =USDwhich measures the US currency against six rivals, has lost nearly 0.6% so far in November, helping emerging Asian currencies regain some ground.
Poon Panichpibool, a market strategist with Krung Thai Bank, however, said there is still a possibility of a rebound in the dollar depending on the risk of stronger-than-expected US data.
“The dollar could rise in the third and fourth quarters of 2024 as markets begin to price in political risks stemming from a presidential election in the United States, however, dollar weakness could continue into the third quarter of 2024,” Panichpibool said.
Back in Asia, the Taiwan dollar TWD=TP rallied more than 3.5% so far in November, snapping a seven-month losing streak. The unit is set on record as its best month in a year.
Increased political uncertainty in Taiwan has caused volatility in the local currency, with two main opposition party candidates after talks about running a joint ticket to take on the ruling party failed.
The Korean earnings also performed reasonably well, adding more than 4% in value. The unit is on record as its best month since last November.
Investors, however, remained bearish on the Indian rupee INR=INchinese yuan CNY=CFXSand the Malaysian ringgit MYR= despite improvement in sensation.
“I think people, including myself, are not sure about the economic recovery in China, although I still call that the Chinese economy has already passed the worst point but remains full of uncertainty ahead,” Panichpibool said.
Investors were most bearish on the Malaysian ringgit among the pack. Trust in the local unit has has been faltering latelyamid continued uncertainty surrounding demand for palm oil and other commodities.
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, Taiwan dollar, Indian rupee , Philippine peso, Malaysian. 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 by non-deliverable forwards (NDFs).
The survey results ASIAPOSN are provided below (US dollar positions against each currency):
DATE
USD/CNY
USD/KRW
USD/SGD
USD/IDR
USD/TWD
USD/INR
USD/MYR
USD/PHP
USD/THB
30-Nov-23
0.12
-0.05
-0.07
-0.05
-0.13
0.63
0.73
-0.10
-0.1
16-Nov-23
0.77
0.49
0.38
0.77
0.63
0.82
1.14
0.38
0.28
02-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
1.00
1.25
0.92
1.08
0.75
1.03
21-Sep-23
1.29
0.94
0.61
0.84
0.98
1.00
1.03
0.64
0.83
7-Sep-23
1.28
1.01
0.30
0.65
0.95
0.79
0.86
0.55
0.57
24-Aug-23
1.42
0.79
0.34
0.77
1.00
0.84
1.18
0.92
0.50
10-Aug-23
0.74
0.68
0.28
0.60
1.12
0.62
0.98
0.75
0.49
27-Jul-23
0.77
0.19
-0.22
-0.14
1.17
-0.06
1.15
0.14
0.15
Survey: Asia’s emerging market currencies
(Reporting by Roushni Nair in Bengaluru; Editing by Varun HK)
((Roushni.Nair@thomsonreuters.com))
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