Adwitiya Srivastava and Himanshi Akhand
(Reuters) – Investors scale back bearish bets on most Asian currencies after U.S. President Donald Trump’s inauguration signaled he would negotiate with trading partners rather than immediately impose hefty tariffs. This was revealed in a Reuters poll on Thursday.
Short bets on the Chinese yuan, Taiwanese dollar and Thai baht were lower than two weeks ago, according to the poll of 11 respondents.
Short positions in the Korean won, the best-performing Asian currency so far in January, also declined.
Many investors expected the tariffs to be among a slew of executive orders signed by President Trump on his first day in office. However, signs of a cautious approach pushed the dollar lower and increased risk sentiment towards Asian currencies.
President Trump said his administration is considering imposing a 10% tariff on imports from China starting February 1, and about 25% tariffs on Mexico and Canada.
“As long as market participants remain confident that the Trump 2.0 administration will not be raising tariffs anytime soon and that the scale of the tariff hikes will not be as severe as previously feared, Asian currencies will continue to support this view. Supported and may decline slightly.”Not only the US dollar but also the UST-10-year yield has slowed/declined,” said Poon Panichpiboor, market strategist at Krung Thai Bank.
Short bets on the Singapore dollar also eased. Lower inflation and higher growth have given the Monetary Authority of Singapore scope to ease policy settings in a review on Friday, but analysts are divided on whether the central bank will wait to assess the impact of President Trump’s policies. are.
Bucking this trend, short bets on the Indian rupee have risen to their highest since mid-July 2022.
Since President Trump won the US presidential election, the rupee has depreciated by about 3%, making it the second-worst depreciation rate among countries in the region this month.
“Overvaluation of the Indian rupee, increasing RBI forward book and broad-based US dollar strength remain factors likely to depreciate the Indian rupee.” barclays (LON:) Analysts added in a note that foreign outflow in the stock market is also weighing on the rupee as foreign exchange reserves dwindle.
Bearish bets on the Indonesian rupiah also rose to the highest since November 2022.
Bank Indonesia (BI) surprised the market last week with an unexpected interest rate cut to boost economic growth.
Barclays analysts said the rupiah was losing its anchor in policy rates.
“If BI’s stance changes to a more dovish and pro-growth stance, there should be further upside potential for USDIDR.”
The Asian Currency Positioning Study 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).
date
January 23, 2025 1.33 1.04 1.11 1.50 1.01 1.78 1.01 0.77 0.54
January 9, 2025 1.65 1.75 1.34 1.20 1.18 1.69 0.99 0.65 0.76
December 12, 2024 1.15 1.86 0.83 0.87 0.82 1.43 0.65 0.53 0.26
November 28, 2024 1.32 1.45 1.12 1.03 1.10 1.13 0.76 1.13 0.66
November 14, 2024 1.14 1.61 0.80 0.81 1.07 0.87 0.65 1.18 0.90
October 31, 2024 0.30 1.06 -0.03 0.59 0.60 0.82 0.11 0.81 0.09
October 17, 24 -0.43 0.26 -0.44 0.04 0.24 0.67 -0.40 0.26 -0.28
October 3, 2024 -1.14 -0.79 -1.26 -1.08 -0.59 -0.04 -1.18 -0.70 -1.45
24/9/19 -0.67 -0.90 -1.12 -1.18 -0.66 0.33 -1.30 -1.10 -1.33
24/09/05 -0.85 -1.09 -1.26 -1.05 -0.77 0.21 -1.46 -1.00 -1.22
