Forex Signals – Asian currencies on recovery
BENGALURU (Reuters) – Long positions across most Asian currencies were comfortably raised, a Reuters poll found, as investors turn increasingly optimistic of the region’s economic rebound with confidence in the U.S. dollar waning and China primed for a recovery.
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Though fragile, recent economic data from China, the world’s second-largest economy, has pointed to a nascent recovery. Long bets on both South Korea’s won and the Malaysian ringgit climbed to more than two-year highs.
Despite many Asian economies suffering double-digit contractions in the last quarter due to lockdown measures, many investors say the worst is probably over.
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“The recovery is now being seen as something more sustainable, which is driving inflows back into Asia and supporting Asian currencies against the dollar,” said Wei Liang Chang, a macro strategist at DBS.
Long positions on the Philippine peso , the region’s top performer so far this year, were also sharply raised to their highest since early 2013.
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One currency that investors have remained bearish about is Indonesia’s rupiah , an interest rate carry trade favourite, on expectations of further monetary easing this year.
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While rates were kept on hold on Wednesday after the vast majority of poll responses came in, analysts are still factoring in further cuts this year over other fiscal and monetary measures.
“Markets are concerned about the fiscal burden sharing with BI (Bank Indonesia), possible fiscal slippage, as well as the diminished yield attractiveness of the rupiah,” DBS’ Chang said.
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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.
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The figures include positions held through non-deliverable forwards (NDFs).
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Forex Signals – Asian currencies on recovery
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