Bearish bets on Asian currencies rise on US rate cut uncertainty

By Roushni Nair

June 27 (Reuters) –Bearish bets on most Asian currencies have firmed as prospects of a tighter monetary policy in the U.S. have boosted the dollar, weighing on the local units despite their improving fundamentals, a Reuters poll showed on Thursday.

Short positions on the Indonesian rupiah IDR= jumped to the highest since early November 2022, while those on the Chinese yuan CNY=CFXS were at the highest since Aug. 24, 2023, according to a fortnightly poll of 12 analysts.

The rupiah, which has lost 6.3% in value against the dollar so far this year, was the most shorted currency by the analysts polled.

The Indonesian currency has faltered since late May as a shift in the U.S. monetary policy outlook led to capital outflows amid concerns the incoming government of President-elect Prabowo Subianto will raise the country’s debt-to-GDP ratio.

“I think foreign investors continue to like Indonesian assets both stocks and bonds and once the concerns over the IDR fade away, foreign fund flows could definitely return to the Indonesian capital markets and boost the IDR higher,” Poon Panichpibool, a markets strategist with Krung Thai Bank said.

The rupiah, which weakened past the 16,400 per dollar level last week, is expected to return to 15,700-15,800 by the end of this year, Panichpibool said.

Meanwhile, analysts solidified short bets on the South Korean won KRW=KFTC, the Singapore dollar SGD=, the Indian rupee INR=IN and the Philippine peso PHP= to the highest since May 2.

Despite improved exports from Taiwan and South Korea, their currencies have underperformed, with the won emerging as the second worst-performing regional currency and bets against it rising to the highest in more than a month.

A delay in interest rate cuts by the Federal Reserve has solidified a stronger-for-longer footing for the greenback, casting a shadow on growth prospects and recovery for emerging Asian assets.

In China, the property sector has not yet fully absorbed policy support measures, while increasing trade tensions with the U.S. and Europe continue to stall confidence in the yuan.

“We do not expect a large one-off depreciation in the CNY, as currency weakness will not address China’s current economic challenges,” analysts at ANZ said in a note.

Meanwhile, the Indian rupee was the least shorted currency in the region ahead of the inclusion of the country’s debt on a global bond index.

Analysts maintained bearish positions on the Malaysian ringgit MYR= and Thailand’s baht THB=TH.

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: Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and 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 ASIAPOSN are provided below (positions in U.S. dollar versus each currency):

Reporting by Roushni Nair in Bengaluru; Editing by Mrigank Dhaniwala

For the new Reuters scrolling global forex service please click FXBUZZ Double click on brackets for following items: Asian currencies AFX= Asian currencies in Asia AFX=A Malaysian ringgit MYRX= Indonesian rupiah IDRX= Singapore dollar SGDX= Thai baht THBX= Taiwan dollar TWDX= Hong Kong dollar HKDX= Philippine peso PHP= Korean won KRW= SPEED GUIDES MONEY ASEAN Exotic currencies EXOTIC/1Non-G7 currencies CCY/1 RELATED NEWS AND OTHER TOPICS All Singapore news SGAll Malaysian news MY Thailand TH Indonesia ID Hong Kong HK Taiwan TW Philippines PH Korea KR All emerging markets EMRG All foreign exchange news FRX Foreign exchange technical analysis FRX&INSI