By Rishav Chatterjee
(Reuters) – Short positions on all Asian currencies were at multi-month lows on Thursday, as analysts shrugged off fears around the potential of an extended global trade war and factored in a boost in appetite towards risk-sensitive assets.
Bearish stances on the Chinese yuan and Singapore dollar were at their lowest since October 31, 2024, while short positions on the South Korean won eased to their lowest since early October, a Reuters Poll of 13 respondents showed.
Short positions were the least on the Thai baht, which has been one of the best-performing currencies in Southeast Asia and has added over 2% since the beginning of the year.
Poon Panichpibool, a markets strategist at Krung Thai Bank, attributed the positioning on the baht to a recent rally in gold prices but expressed caution around the currency due to uncertainty from the U.S.
Minutes from the U.S. Federal Reserve’s latest meeting revealed that President Donald Trump’s initial policy proposals raised concerns about rising inflation, further clouding the central bank’s timeline for potential interest rate cuts.
Markets are pricing in another 45.5% chance of a 25-basis-point cut from the Fed at its meeting in mid-July, according to the CME FedWatch tool.
The dollar index, which measures the greenback against six major rivals, has fallen 2.6% since the beginning of the month, with the markets seeing Trump’s tariff threats as a negotiating strategy rather than a definitive objective.
Analysts have, for a while, been scaling back their short bets on Asian currencies after Trump’s initial policies showed he would take a more measured step towards tariffs than was feared.
“Whilst Trump tariffs still loom, it is unclear whether they would actually be enacted or remain negotiating tools,” Maybank analysts said.
Short bets eased on the Indian rupee but were still firmly in bear territory after the Reserve Bank of India announced its first rate cut in nearly five years earlier this month.
The RBI had also intervened heavily to shore up the struggling currency earlier this month. The rupee has declined about 1.3% since the beginning of the year, reflecting a delay in Trump’s tariff proposals actually being implemented.
“Looking ahead, while domestic conditions have started to stabilise post-Budget and monetary policy announcements, concerns from overseas remain, contributing to ongoing volatility in the forex market,” said Dilip Parmar at HDFC Securities.
“The central bank has begun intervening more aggressively in response to the surge in forex market volatility, particularly due to Trump’s tariff policies.”
Among other currencies, short positions on the Taiwan dollar and Philippine peso were at their lowest since mid-October.
Bears trimmed their stance on the Malaysian ringgit and Indonesian rupiah as well.
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/CNY USD/KRW USD/SGD USD/IDR USD/TWD USD/INR USD/MYR USD/PHP USD/THB
20-Feb-25 0.88 0.83 0.31 1.06 0.59 1.22 0.37 0.31 0.02
06-Feb-25 1.15 1.01 0.86 1.25 1.14 1.98 0.62 0.93 0.23
23-Jan-25 1.33 1.04 1.11 1.50 1.01 1.78 1.01 0.77 0.54
09-Jan-25 1.65 1.75 1.34 1.20 1.18 1.69 0.99 0.65 0.76
12-Dec-24 1.15 1.86 0.83 0.87 0.82 1.43 0.65 0.53 0.26
28-Nov-24 1.32 1.45 1.12 1.03 1.10 1.13 0.76 1.13 0.66
14-Nov-24 1.14 1.61 0.80 0.81 1.07 0.87 0.65 1.18 0.90
31-Oct-24 0.30 1.06 -0.03 0.59 0.60 0.82 0.11 0.81 0.09
17-Oct-24 -0.43 0.26 -0.44 0.04 0.24 0.67 -0.40 0.26 -0.28
03-Oct-24 -1.14 -0.79 -1.26 -1.08 -0.59 -0.04 -1.18 -0.70 -1.45
19-Sep-24 -0.67 -0.90 -1.12 -1.18 -0.66 0.33 -1.30 -1.10 -1.33
05-Sep-24 -0.85 -1.09 -1.26 -1.05 -0.77 0.21 -1.46 -1.00 -1.22
(Reporting by Rishav Chatterjee in Bengaluru; Editing by Janane Venkatraman)
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