Bullish bets on most Asian currencies rise on Fed rate cut bets: Reuters poll By Reuters

By Roushni Nair

(Reuters) – Analysts lifted bullish bets on most Asian currencies after mixed data raised concerns about economic growth in the world’s biggest economy, raising the chances of big U.S. rate cuts and delaying the allure of the almighty dollar.

Long bets on the South Korean won and the Singapore dollar, which is the region’s best performer so far this year, rose to their highest level since Jan. 26, 2023. Bearish bets on the Indian rupee remained intact, a survey of 12 twelve. analysts said on Thursday.

Singapore is among the few countries in the world with a triple-A sovereign credit rating reflecting exceptionally strong fiscal and external balance sheets, factors that reinforce its position as a safe haven for investors.

Meanwhile, the current low value of the Indian rupee against the greenback is largely due to the Reserve Bank of India’s (RBI) efforts to control the currency’s exchange rate, mainly by buying foreign currency to build up reserves in recent years. ten years, wrote analysts from ANZ. .

“The result (of RBI intervention) is increased foreign reserves, unusually low exchange rate volatility and an active use of the forward rate to synchronize foreign exchange intervention with domestic liquidity conditions,” ANZ analysts said.

The US dollar’s impressive 5 percent gain in the first half of the year was largely erased as market expectations shifted toward more aggressive interest rate cuts.

Data showed U.S. job openings fell to a 3½-year low in July, indicating a continued easing of labor market tightness, while remarks by San Francisco Fed President Mary Daly further reaffirmed the need to reduce rates.

Traders see a quarter-point cut at the Sept. 17-18 Fed meeting as a slightly more likely move, but give a 50-basis-point cut about a 49% chance, up from 41% just ahead of the data , miss the futures show.

Elsewhere, bulls on the Chinese yuan rose to their highest level since Feb. 9, 2023, and long bets on the Thai baht rose to their highest since Jan. 26, 2023.

The rupiah’s significant yield advantage over the yuan, combined with the contrasting outlook and stable exchange rates, has made yuan borrowing investing in rupee-denominated assets one of the most profitable carry trade strategies in Asia.

In Thailand, the easing of political tensions and favorable economic growth justified the increase in foreign flows.

Analysts maintained their bullish stance on the Indonesian rupiah, Philippine peso and Malaysian ringgit.

The Asian Currency Positioning Survey focuses on what analysts and fund managers believe are the current market positions in nine emerging Asian currencies: the Chinese yuan, the South Korean won, the Singapore dollar, the Indonesian rupiah, the Taiwan dollar, the Indian rupee, Philippine peso, Malaysian peso. ringgit and 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 in US dollars.

The figures include positions held through non-deliverable forwards (NDFs).

The survey results are shown below (positions in US dollars against each currency):

DATE USD/ID

R

05-Sep-24 -0.85 -1.09 -1.26 -1.05 -0.77 0.21 -1.46 -1.00 -1.22

22-Aug-24 -0.62 -0.93 -1.08 -1.26 -0.70 0.21 -1.57 -1.03 -1.16

08-Aug-24 -0.02 0.05 -0.61 -0.02 0.59 0.60 -0.78 -0.29 -0.57

25-Jul-24 1.07 0.79 -0.33 0.35 0.86 0.12 0.39 0.43 0.02

11-Jul-24 1.05 0.87 0.06 0.73 0.68 0.22 1.03 0.86 0.51

27-Jun-24 1.34 1.28 0.80 1.49 0.88 0.46 1.00 1.37 0.91

13-Jun-24 0.95 0.87 0.62 1.22 0.64 0.37 1.00 1.23 0.92

30-May-24 1.05 0.72 0.33 0.94 0.53 0.00 0.81 1.19 1.00

16-May-24 1.05 0.96 0.35 0.96 1.02 0.39 1.23 1.29 1.00

2-May-24 1.25 1.61 0.89 1.39 1.40 0.49 1.46 1.44 1.39