Stocksak poll: Asian FX bearish bets remain firm on slowdown fears and the towering dollar

© Stocksak. FILEPHOTO: This picture illustration shows Malaysian ringgit Bank Notes in different denominations. It was taken in Kuala Lumpur, August 20, 2013.REUTERS/Bazuki Muhammad

By Tejaswi Marthi

(Stocksak). Bearish bets on Asian currency remained firm due to the unrelenting power of the U.S.dollar. However, the ultra-hawkish posturing led by the Federal Reserve by most central banks around the world stoked fears about a recession, according to a Stocksak survey.

Sentiment was also affected due to the yuan’s weakness throughout the week. China tightened its COVID curbs, increasing public checks and imposing lockdowns on residential areas following an increase in cases in recent weeks.

China’s monetary policy is also a standout among major economies that are aggressively raising rates. China’s central bank held off on more stimulus, keeping lending rates at their current level for the second consecutive month.

The poll of 14 respondents revealed that short positions in the Yuan rose marginally in two weeks, despite being at multi-year highs over the past weeks.

Similar bets on Malaysian ringgit, Indian rupee and the Malaysian rupee also increased while those on Indonesian Riah and Thai Baht remained stable.

Regional currencies languished near multi-year lows –– with some near record lows –– in the shadow of a towering greenback.

Bearish bets on the ringgit have fallen to nearly 12% so this year. Analysts’ views of the currency became more bearish due to uncertainty surrounding the country’s general elections.

“Aside form political uncertainty, an increase in foreign funds outflows from equity owing volatile commodities prices and aggressive rate increases from the Malaysian central banks could spark selling pressures to the country’s assets,” stated Poon Panichpibool of Krung Thai Bank, markets strategist.

Analysts believe that the short position in the Singapore dollar has narrowed over recent weeks, as the island-state’s currency was better positioned for the storm of rising interest rates.

“The city-state is home to key banks that thrive in times when borrowing costs push up,” said Daniel Dubrovsky (an analyst at DailyFX IG).

“Despite recent tightening by the Monetary Authority of Singapore (Monetary Authority of Singapore), I believe that, I think is still poised for higher soon.”

The Asian currency position poll focuses on what fund managers and analysts believe the current market positions are in nine emerging Asian currencies: South Korean won, Chinese yuan and South Korean won, Singapore dollars, Indonesian rupees, Taiwanese dollars, Taiwanese rupiahs, Taiwanese dolars, Indian rupees, Philippine pesos, Malaysian ringsgit, and the Thai baht.

The poll uses net long and short positions to estimate net positions on a scale ranging from minus 3 up to plus 3. A score of plus3 means that the market is significantly long USD.

These figures include positions held through NDFs (non-deliverable forwards).

Below are the survey findings (positions in U.S. Dollar versus each currencies):


20-Oct-22 1.96 2.02 1.13 1.83 1.98 1.6 2.33 1.94 2

06-Oct-22 1.94 2.25 1.53 1.86 2.12 1.55 2.22 2.16 2.08

22-Sept-22 2.09 2.39 1.61 1.35 2.37 1.23 1.9 1.94 1.86

08-Sept-22 2.04 2.33 1.54 1.13 1.93 1.35 1.89 1.7 1.59

25-Aug-22 1.68 1.85 1.12 1.03 1.53 1.31 1.9 1.38 1.28

11-Aug-22 0.86 1.1 0.51 0.83 1.14 1 1.41 0.88 0.87

28-July-22 1.14 1.63 0.92 1.31 1.42 1.62 1.59 1.54 1.89

14-July-22 1.07 1.84 1.44 1.59 1.76 1.98 1.68 2.06 1.78

30-June-22 1 2 1.08 1.5 1 1.8 2 2.05 1.39

16-June-22 1.54 1.79 1.35 1.33 1.23 1.66 1.67 1.7 1.34

News Source and Credit

Stocksak Editorial

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