Asian forex bears climb to multi-year highs as Thai baht short bets rise the most
BANGKOK, July 15 (Reuters): Bearish bets on almost all Asian currencies have firmed to new multi-year highs as fears of a looming recession as interest rates rise rapidly to curb the Skyrocketing inflation dampened sentiment, a Reuters poll showed.
Short positions in the Thai baht, Philippine peso and Singapore dollar were at their highest since 2018, when data first became available, according to a biweekly survey of 13 respondents.
On average, analysts have not held a net long position in an Asian currency since late April.
Bearish bets on the baht have firmed the most, with a worsening Covid-19 situation in China, which is pursuing a “zero-COVID” strategy, stoking fears of a delay in the return of Chinese tourists to Thailand. Pessimism levels on the Chinese yuan, seen as a safer bet among Asian currencies, remained largely unchanged.
The Philippine peso was Asia’s shortest currency after hitting a 17-year low earlier this week as investors feared rate hikes by the Bangko Sentral ng Pilipinas (BSP) could leave it further behind the currency-fighting curve. ‘inflation.
“What sets PHP apart here is that the Philippines is a net food importer, which also has a high food trade deficit. This makes the country quite vulnerable to rising food prices as a result of the pandemic. “said Daniel Dubrovsky, analyst. at the IG.
“At the end of the day, despite the recent improvement in BSP’s hawkish expectations, the Federal Reserve remains much more aggressive.”
Survey responses were collated before the BSP surprised markets on Thursday with a 75 basis point off-cycle hike in its benchmark interest rate.
Concerns that central banks, including the Philippines and Thailand, could lag far behind the Fed on policy tightening have shaken confidence in these countries’ currencies in recent months.
Thailand has so far left its key rate at a record high, but economists expect the Bank of Thailand to raise it at its next meeting on August 10. In another off-cycle move,
Singapore’s central bank also refocused the midpoint of the currency’s exchange rate policy band earlier in the day.
Analysts raised their short positions in the Indian rupee, which has hit record lows every day so far this week despite central bank efforts to boost currency inflows.
India, like many other economies, is battling runaway inflation despite tighter policies and wheat export restrictions.
The Asian Currency Positioning Survey focuses on what analysts and fund managers believe to be the current market positions in nine Asian emerging market currencies: Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupiah, Philippine peso, Malaysian dollar. ringgit and Thai baht.
The survey uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates that the market is significantly long the US dollar. Figures include positions held through non-deliverable forwards (NDF). -Reuter