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Asian FX bulls return as dollar slips; short bets on Indian rupee spike - Reuters poll

04/22/2021 | 01:59am EDT
FILE PHOTO: South Korean won, Chinese yuan and Japanese yen notes are seen on U.S. 100 dollar notes in this picture illustration taken in Seoul

(Reuters) - Investors turned bullish on most Asian currencies, a Reuters poll found, as easing bets of a sooner-than-expected hike in U.S. interest rates drove down U.S. Treasury yields and curbed the dollar's interest rate advantage.

Sentiment towards currencies of export-focused nations with lower COVID-19 cases improved the most, the fortnightly poll of 13 respondents found. Bearish views on the Indian rupee, however, rose sharply as COVID-19 cases surged in the country.

The spike in U.S. Treasury yields last month has reversed course, as worries over a potential acceleration in inflation faded, while the U.S. Federal Reserve also made it clear that it would not hike interest rates anytime soon.

As a result, investors have pulled out of the greenback, sending it to multi-week lows.

"The U.S. central bank continues to hold the stance that a rise in inflation may be transitory," said Daniel Dubrovsky, a strategist at IG's DailyFX.

"I believe what we are seeing is a relief rally in ASEAN FX. This could continue if the Fed remains dovish as the growth story plays out. Only time will tell what will happen between growth and inflation."

Long bets on the yuan stood at their highest in nearly two months, as China's economic recovery quickened sharply in the first quarter to record growth of 18.3% from last year's coronavirus slump, led by exports.

Bullish positions on the Singapore and Taiwanese dollars were at their highest since early and late February, respectively, as exports data painted pictures of strong growth.

Long positions on the Philippine peso were at a more than two-month high, as data showed the country's trade deficit shrank in February while remittances, an important source of dollars to the country, grew after months of declines.

Bearish bets on India's rupee climbed to their highest since last April, as a virus surge halted what was recently seen as a promising growth story in the region.

Markets were aggressively pricing in hawkish Reserve Bank of India monetary policy expectations too, which unwound after the central bank revealed at its policy meeting this month that it was still dovish, DailyFX's Dubrovsky said.

"So combine this with surging COVID-19 cases and prospects of tightening look increasingly grim, leaving the rupee vulnerable in the near term," Dubrovsky said.

India on Thursday reported more than 300,000 coronavirus daily cases, the highest daily global total. Vaccinations, in contrast, have been sluggish and healthcare facilities severely strained, prompting widespread curbs.

Short bets on the Thai baht persisted as the nation struggles with a new coronavirus wave that includes a highly transmissible variant, and faces a shortage of vaccines, with no recovery of its important tourism industry in sight.

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 CNY KRW SGD IDR TWD INR MYR PHP THB

22-Apr -0.17 -0.23 -0.44 0.56 -0.38 0.75 -0.03 -0.37 0.58

08-Apr 0.72 0.48 0.30 0.59 0.77 0.20 0.46 0.36 0.91

25-Mar 0.30 0.65 0.46 0.45 0.50 0.05 0.54 0.11 0.54

11-Mar -0.06 0.55 0.55 0.22 -0.10 -0.37 0.50 0.09 0.49

25-Feb -1.03 -0.32 -0.57 -0.51 -0.58 -0.96 -0.13 0.01 -0.37

11-Feb -0.91 -0.24 -0.29 -0.36 -0.63 -0.53 -0.04 -0.47 -0.41

28-Jan -1.08 -0.64 -0.79 -0.41 -0.68 -0.55 -0.3 -0.66 -0.36

14-Jan -1.21 -0.87 -0.83 -0.57 -0.89 -0.22 -0.3 -0.8 -0.5

10-Dec -1.53 -1.68 -1.11 -0.61 -1.6 -0.2 -0.53 -0.97 -0.87

26-Nov -1.43 -1.29 -1.01 -0.92 -1.08 -0.3 -0.75 -0.8 -0.66

12-Nov -1.28 -1.52 -0.99 -1.01 -1.08 -0.26 -0.44 -0.67 -0.8

(Reporting by Rashmi Ashok in Bengaluru; Editing by Subhranshu Sahu)

By Rashmi Ashok


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / INDIAN RUPEE (AUD/INR) -0.39% 54.722509 Delayed Quote.-2.54%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.22% 0.738 Delayed Quote.-4.33%
BRITISH POUND / CHINESE YUAN RENMINBI (GBP/CNY) -0.16% 8.989662 Delayed Quote.0.56%
BRITISH POUND / US DOLLAR (GBP/USD) -0.11% 1.39 Delayed Quote.1.58%
CANADIAN DOLLAR / CHINESE YUAN RENMINBI (CAD/CNY) -0.18% 5.1523 Delayed Quote.0.84%
CANADIAN DOLLAR / INDIAN RUPEE (CAD/INR) -0.19% 59.113 Delayed Quote.3.67%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.11% 0.79711 Delayed Quote.1.86%
EURO / CHINESE YUAN RENMINBI (EUR/CNY) -0.33% 7.6533 Delayed Quote.-3.77%
EURO / INDIAN RUPEE (EUR/INR) -0.27% 87.8825 Delayed Quote.-1.09%
INDIAN RUPEE / CHINESE YUAN RENMINBI (INR/CNY) -0.01% 0.087138 Delayed Quote.-2.72%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.07% 0.013477 Delayed Quote.-1.77%
MSCI TAIWAN (STRD) 0.95% 711.631 Real-time Quote.16.88%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.02% 0.70475 Delayed Quote.-2.69%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.02% 6.4629 Delayed Quote.-0.48%
US DOLLAR / INDIAN RUPEE (USD/INR) -0.02% 74.198 Delayed Quote.1.77%
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