Dollar has lost ground against all Asian currencies
2022.12.01 03:27
Dollar has lost ground against all Asian currencies
Budrigannews.com – Budrigannews found that prospects of China’s reopening helped investors turn slightly bullish on the currencies of South Korea, Malaysia, and Thailand, while bearish positions on other
Asian currencies remained at multi-month lows in the face of a weaker dollar.
A survey of 12 analysts conducted on Thursday found that for the first time since July 1, 2021, market participants were bullish on the U.S. dollar-sensitive South Korean won.
The fortnightly poll was conducted prior to U.S. Federal Reserve Chair Jerome Powell’s late Wednesday signal of slower rate hikes beginning in December, which caused the safe-haven dollar to lose its footing. The recorded its worst monthly performance since September 2010 when it fell 5.2% in November.
Investors returned to emerging markets in November on the assumption that the strength of the dollar and U.S. yields had reached their highest points.
In a note published last week, BofA analysts stated, “Given the negative burden of the Fed’s tightening cycle on Asian currencies, an eventual pivot toward easing will likely deliver a rally in Asia FX.”
The lowest level of short bets on the Indian rupee since the middle of April was reached. The easing of the dollar brought about the currency’s first monthly gain in November of this year, snapping its longest losing streak in nearly four decades.
Radhika Rao, a DBS analyst, wrote in a note, “Even as inflation is past its peak, headline and core prints are still elevated, necessitating the Indian central bank to continue with the rate hike cycle.”
After a series of protests in some cities and support measures for its debt-laden property sector, China’s potential shift from a zero-COVID policy toward reopening further bolstered risk sentiment in emerging Asia.
According to BofA analysts, “The reopening would boost Korea’s exports due to its high exposure to China,” and “Thailand would benefit from a return of China tourism inflows in 2H 2023,” it would also aid Malaysia’s export revenues.
However, investor attention was focused on the implementation of COVID measures and external demand, and bearish bets on China’s yuan remained at their lowest levels since April.
Short bets on the rupiah of Indonesia remained firm, while those on the peso of the Philippines were reduced to their lowest level since Feb. 24.
Short positions on the Thai baht reversed to levels last seen at the beginning of March, and those on the Malaysian ringgit were on the verge of becoming bullish.
After Anwar Ibrahim was sworn in as prime minister on Thursday, political unease diminished in Malaysia.Barclays, however (LON:) The slowing economy and the growing fragmentation of domestic politics, analysts warn, pose challenges.
As the region’s best-performing currency remained supported by its central bank’s targeted monetary policy intervention, bullish views on the Singapore dollar increased slightly.
The focus of the Asian currency positioning survey is on analysts’ and fund managers’ perceptions of the current market positions of nine emerging market currencies from Asia: the South Korean won, the Singapore dollar, the Indonesian rupiah, the Taiwanese dollar, the Indian rupee, the Philippine peso, the Malaysian ringgit, and the Thai baht are all examples of these currencies.
On a scale from minus 3 to plus 3, estimates of net long or short positions are used in the poll.If the score is plus 3, the market is very long the US dollar.
Positions held by non-deliverable forwards (NDFs) are included in the figures.
