Asian FX bulls jump to multi-year highs, spurred by China reopening- Reuters poll

Asian FX bulls jump to multi-year highs, spurred by China reopening- Reuters poll
Asian FX bulls jump to multi-year highs, spurred by China reopening- Reuters poll
© Reuters

By Archishma Iyer

(Reuters) – Bullish bets on the Thai baht and Chinese yuan hit five-year highs as China’s sharp pivot from its strict COVID-19 curbs boosted investors’ appetite for strengthening long positions in regional currencies, a Reuters poll showed on Thursday.

Long positions firmed on nearly all Asian emerging currencies, many of which had plunged to multi-year lows against the U.S. dollar in 2022 due to the U.S. Federal Reserve’s aggressive monetary tightening and other factors such as rising inflation and the Russia-Ukraine conflict.

Bullish bets on the South Korean won and Malaysian ringgit were at more-than-two-year highs, while bets on the Singapore dollar were the most bullish in five years, the fortnightly poll of 12 analysts showed.

“Lower positioning, cheaper valuations, a softer U.S. dollar, peak Fed rates and the onset of an easing cycle across emerging markets later this year will improve the attractiveness of EM FX and local currency debt, suggesting that investors will increasingly return to EM assets following a very tough 2022,” analysts at TD Securities said in a note.

The appetite for high-risk Asian assets has increased significantly since China, a manufacturing powerhouse and the region’s largest trading partner, began dismantling its stringent COVID curbs in December, while firming bets that major central banks would ease monetary policy also aided sentiment.

The biggest benefactor of China’s mobility relaxations has been the Thai baht, which scaled a more-than-nine-month peak on expectations the Southeast Asian country will benefit from more Chinese tourists, estimated to be at least five million this year.

The baht has strengthened 3.5% in the first two weeks of 2023, more than any of its Asian peers, with bullish positions hitting the highest since January 2018.

“The Thai economy is likely to be on the sweet spot of experiencing strong growth recovery and (and) appreciating Thai baht without slowing the pace of growth materially,” Enrico Tanuwidjaja, an economist at United Overseas Bank (OTC:), said in a note.

“The Thai baht looks set to outperform other Asian currencies in 2023.”

Meanwhile, investors turned marginally bullish on the Indonesian rupiah for the first time since April last year, although the long bets on the currency were the least among the currencies that were a part of the Reuters poll.

The only currency, among the nine in the poll, was the Indian rupee. However, investors sharply cut their short positions on the currency to levels last seen on February 2022, although headwinds from a widening current account deficit continue to pose a challenge.

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

12-Jan-23 -1.58 -1.39 -1.31 -0.1 -0.67 0.07 -0.82 -0.61 -1.85

15-Dec-22 0.08 -0.55 -0.85 0.92 -0.22 0.63 -0.36 -0.15 -0.69

1-Dec-22 0.63 -0.15 -0.3 1.08 0.15 0.76 -0.02 0.33 -0.16

17-Nov-22 0.74 0.21 -0.06 1.06 0.84 1.13 1.18 0.89 0.4

03-Nov-22 1.81 1.38 0.47 1.57 1.81 1.47 2.02 1.36 1.34

20-Oct-22 1.96 2.02 1.13 1.83 1.98 1.6 2.33 1.94 2

06-Oct-22 1.94 2.25 1.53 1.86 2.12 1.55 2.22 2.16 2.08

22-Sept-22 2.09 2.39 1.61 1.35 2.37 1.23 1.9 1.94 1.86

08-Sept-22 2.04 2.33 1.54 1.13 1.93 1.35 1.89 1.7 1.59

25-Aug-22 1.68 1.85 1.12 1.03 1.53 1.31 1.9 1.38 1.28

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
AdonFinance
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance