Short positions on the Indian rupee firmed to their highest since November 2022, while those on the Indonesian rupiah, the best performing among its regional peers, touched its highest in more than nine months. Bearish bets on Thailand's baht were at near a three-month high.
The recent jump in crude oil prices has increased concerns about a narrowing current account surplus in net importers like Thailand and India, which could fan inflation pressures.
The rupee has been at risk of slipping to a record low against the dollar, but likely intervention from the country's central bank has staved off the currency from its all-time low hit last October.
"Among higher-yielding currencies, we narrowly prefer the INR (rupee) and PHP (peso) over the IDR (rupiah) from a reserves adequacy perspective, even though we acknowledge that the INR and PHP have larger trade deficits that could be exacerbated in the coming months if oil prices stay high," HSBC said in a note.
Investors remained most bearish on China's yuan, among the nine currencies in the poll, as widening yield differentials with other major countries, particularly the United States, and a struggling economy has pressured the currency.
While the yuan has steadied recently after the central bank's slew of supportive measures and signs of a stabilising economy, its nearly 5.5% slide so far this year places it among Asia's worst-performing currencies.
The dollar, on the other hand, is at its highest since early March after the Federal Reserve stiffened its hawkish stance on Wednesday. [USD/]
While the central bank held rates steady, it projected another possible rate hike this year and significantly tighter rates through 2024 than previously expected. All the poll responses were received before the latest Fed meeting.
The dollar could peak towards the end of the year on the likelihood the Fed may signal rate cuts going into 2024 due to easing inflationary pressures and slowing growth momentum, said Wei-Liang Chang, a macro strategist with DBS.
"If pricing shifts on the Fed to accommodate interest rate cuts, then sentiment in emerging Asia could turn in more supporters, with Asian currencies strengthening going into next year or the first quarter of 2024," Chang said.
For now though, short positions on the Singapore dollar are at their highest since mid-July and a one-month high on the Malaysian ringgit.
The Korean won was the only currency on which bearish bets were eased back.
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
21-Sep-23 1.29 0.94 0.61 0.84 0.98 1.00 1.03 0.64 0.83
7-Sep-23 1.28 1.01 0.30 0.65 0.95 0.79 0.86 0.55 0.57
24-Aug-23 1.42 0.79 0.34 0.77 1.00 0.84 1.18 0.92 0.50
10-Aug-23 0.74 0.68 0.28 0.60 1.12 0.62 0.98 0.75 0.49
27-Jul-23 0.77 0.19 -0.22 -0.14 1.17 -0.06 1.15 0.14 0.15
13-Jul-23 1.33 0.12 0.62 0.52 1.13 0.10 1.77 0.26 0.73
29-Jun-23 1.74 0.29 0.50 0.30 0.72 -0.14 1.85 0.29 1.03
15-Jun-23 1.59 -0.03 0.17 -0.33 0.68 -0.24 1.64 0.74 0.25
01-Jun-23 1.88 0.68 0.73 0.23 0.70 0.48 1.77 1.08 0.45
18-May-23 1.27 0.88 0.19 -0.27 1.00 0.11 1.10 1.12 -0.5
04-May-23 0.56 1.01 -0.04 -1.05 0.65 -0.14 0.69 0.86 -0.43
(Reporting by Roushni Nair in Bengaluru, additional reporting by Sameer Manekar; Editing by Savio D'Souza)
By Roushni Nair
