Analysts are the most long on the Malaysian ringgit and Thai baht Long Thai baht is at a 20-month high Long positions on the Philippine peso are at a four-year peak Bearish view on the Indian rupee remains strong
Sept 19 (Reuters) – Analysts said most investors were willing to trade, despite slightly lowering some bets, as a defensive U.S. dollar from a dovish Federal Reserve boosted the appeal of risk-sensitive assets. remained bullish on Asian currencies, a Reuters poll showed on Thursday.
Long bets were highest on the Malaysian ringgit and Thai baht, with the latter at its highest since January 2023 due to strong growth fundamentals and political stabilization.
The responses to the biweekly poll of 10 economists and analysts came in ahead of the U.S. Federal Reserve’s half-point rate cut and Bank Indonesia’s unexpected quarter-point rate cut on Wednesday. .
Expectations for Fed rate cuts have put the dollar on the defensive, giving emerging markets some much-needed breathing room and increasing their appeal. Most Asian currencies posted impressive recoveries against the dollar in August.
“We do not rule out further USD weakness in the coming weeks and expect overall downward pressure on the USD/Asia exchange to continue,” Barclays analysts said.
The dollar index is hovering around 100 against a basket of major currencies, down from 104 at the end of July.
Analysts said they expect Asian currencies to continue rising in the fourth quarter, but expect a reversal in the first half of 2025.
Ryota Abe, an economist at Sumitomo Mitsui Banking Corporation, said the market’s view of a Fed rate cut by the end of the year “looks excessive” and could lead to a correction in Asia’s emerging market currencies.
Bullish bets on the Chinese yuan and Singapore dollar returned to levels seen four weeks ago, while bets on the Philippine peso hit a four-year high.
Analysts are long on the Indonesian rupiah for the fourth consecutive survey, highlighting the recent rally driven by solid economic fundamentals and rising capital flows into emerging markets, which will continue in 2023. This is the longest since May.
The rupiah has appreciated more than 6% since July and is expected to continue rising after Bank Indonesia (BI)’s surprise rate cut aimed at supporting growth, spearheaded by the Federal Reserve.
Barclays analysts said that because BI is “likely to be roughly on par with or slightly below the Fed in terms of the size of aggregate rate cuts,” it is “not inevitable that the IDR will lose market support from an interest rate differential perspective.” ” he said.
Although the Indian rupee continues to be out of favor with analysts, short positions have halved since early August as the rupee has recovered from selling due to the unwinding of yen carry trades.
The Asian Currency Positioning Survey examines what the current market position is for nine Asian emerging market currencies: Chinese Yuan, Korean Won, Singapore Dollar, Indonesian Rupiah, Taiwan Dollar, Indian Rupee, Philippine Peso, and Malaysia. Focuses on what analysts and fund managers think. Ringgit and Thai Baht.
This poll 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.
This figure includes positions held through non-deliverable forwards (NDFs).
The findings are shown below (positions in USD and each currency).
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Report by Sameer Manekar in Bangalore. Edited by: Varun HK
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