By John Biju and Archishma Iyer
Amidst Shifting Tides
March 21 (Reuters) – The latest insights from a Reuters poll reveal a surge in bearish bets on most emerging Asian currencies in March. The South Korean won and Taiwan dollar witnessed a notable strengthening of short positions, while the Indian rupee remained steadfast with long positions, painting a unique picture of investor sentiment in the region.
Experts had their say before the Federal Reserve’s recent decision to maintain interest rates, further hinting at three possible rate hikes this year. This has led investors to anticipate monetary policy adjustments in Asian central banks, aligning with the stance of the Fed.
“Some of these tech-linked currencies may have broken down, largely because of the fear that whether the U.S. rates could still stay here for longer,” commented Christopher Wong, a currency strategist at OCBC. He elaborated, “I think this situation could continue until we get better clarity that there are going to be rate cuts, then we should perhaps see some recovery in the Asian currencies, including the Taiwan dollar.”
Unwavering Trends
Bearish bets on other currencies like the Chinese yuan, Singapore dollar, and Thai baht strengthened, reaching peaks not seen since early November 2022. Short positions on the Indonesian rupiah also climbed to their highest point since mid-November last year.
Interestingly, the Indian rupee stood out as the sole performing currency, earning accolades from analysts due to its resilience. Factors such as promised fiscal stability post upcoming general elections, continuous foreign investments, and local central bank intervention have infused optimism in the region’s currency.
Analyst Vijay Vikram from Societe Generale noted, “We expect the elections to have a limited consequence on INR volumes – given the low uncertainty around the outcome of elections – as of today.”
Calling for Reform
On another note, bearish bets on the Malaysian ringgit remained relatively unchanged, with the currency managing to recover from its 26-year low in February. Although showing improvement, the ringgit is still down 2.4% for the year. The country’s central bank echoed a call for structural reforms to ensure the long-term economic vitality and currency support.
Insights into Market Positions
The Asian currency positioning poll captures the current market sentiments on nine emerging Asian currencies. The poll utilizes a scale ranging from minus 3 to plus 3 to indicate net long or short positions. A score of plus 3 signifies a significant long position on U.S. dollars.
The displayed figures encompass positions held through non-deliverable forwards (NDFs), offering a comprehensive outlook on the market. The provided values demonstrate the evolving trends and sentiments towards Asian currencies over recent intervals. For detailed figures, visit the poll link below.
Poll: Asia’s emerging market currencies
(Reporting by Archishma Iyer and John Biju; Editing by Mrigank Dhaniwala)
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
