The strong dollar restrains FX in Asia.Rupee Bears Reappear: Poll

Investors place short-term bets on most emerging Asian currencies as many factors have pushed the dollar up, including expectations of a US rate hike, rising inflation, and signs of slowing global economic growth, according to a Reuters biweekly survey. bottom.

Long positions in the Singapore dollar, Taiwan dollar and Indian rupee have reversed, and the bearish view of the Korean won has peaked for the first time in two years, a survey of 12 respondents said.

The Indonesian rupiah was the only currency with a bullish tendency, but long bets were almost halved.

The greenback of a safe haven has raised rates on the market at some point in 2022 when the Federal Reserve Board’s hawkish inclination two weeks ago made it more attractive due to the sharp rise in benchmark Treasury yields. Since then, it has risen to the highest price in a year.

The dollar is expected to dominate the currency market for the next year as inflation concerns surface as energy prices soar during the supply crisis and threaten global economic growth.

Asia’s economic outlook is already undermined by China’s slowdown, supply chain bottlenecks, and the protracted effects of the devastating COVID-19 wave in trade-dependent countries such as Thailand and the Philippines.

However, despite the debt crisis at real estate giant China Evergrande, partly due to HSBC’s desire for land markets to fine-tune policy by the Central Bank of China, the currency remained resilient and moved to the yuan. The bets haven’t changed much.

As India is the world’s third-largest oil consumer, investors have turned rupees bearish for the first time since mid-August after testing oil prices at $ 80 a barrel. The rupee has been the best-selling currency in Asia since the Fed’s meeting.

Barclays analysts said the recent slowdown in foreign capital inflows into Indian equities was offset by a pick-up in bonds to keep the economic growth trajectory intact and the rupee not above 75.0 per dollar. Said it seems.

Taiwanese and South Korean currencies have fallen in parallel with the sold-out of local stock exchanges, where inflation-sensitive tech stocks dominate. So far this month, they have faced outflows of $ 2.13 billion and $ 762 million, respectively.

Meanwhile, according to Barclays analysts, investors preferred the rupiah among Asian currencies as rising commodity prices and large trade surpluses were found to be below risky currencies.

The Asian Currency Positioning Survey conducted analysts and fund managers on nine emerging market currencies in Asia (Chinese yuan, Korean won, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and Thai baht.

Polls use net long or short position estimates on a scale of minus 3 to plus 3. A plus 3 score indicates that the market is a fairly long US dollar.

This number includes positions held through non-deliverable forwards (NDFs).

By Anushka Trivedi