Investors trim long bets on Asian currencies as headwinds to dollar ease
Poll participants were most bullish on the Singapore dollar and the Taiwan dollar , and maintained short bets on the Indian rupee for a fourth consecutive survey, the fortnightly poll of 11 respondents showed.
Long bets on Indonesia's rupiah turned almost neutral, following the central bank's dovish tilt, while participants were slightly bearish on the Philippine peso .
Nearly all poll responses were received by Tuesday, a day before the United States announced a trade deal with Indonesia and the Philippines at lower than previously proposed tariff rates, buoying investor sentiment in the region.
The U.S. dollar has remained under pressure for much of the first half of the year from concerns about President Donald Trump's erratic trade policy and its impact on economic growth, and bets of interest rate cuts.
And while the dollar index, opens new tab, which measures the greenback against a basket of major currencies, is still pinned near its early 2022 levels, analysts are anticipating a near-term rebound.
"The 'de-dollarisation' theme should continue while there are lingering questions around U.S. trade policy uncertainty, fiscal sustainability, and Fed independence," HSBC analysts said.
"But it is likely becoming less intense, considering the substantial correction of the USD's overvaluation and the recovery of U.S. equities," they said, adding that Asian currencies will strengthen in the second half, albeit more modestly.
Long positions on Singapore's dollar ticked lower but remained firmly bullish.
The currency has appreciated sharply against the greenback this year as the city-state's high-yield equities and stable economy attract investors seeking a safe haven in a region exposed to the whims of U.S. tariff barriers.
Market participants look to the Monetary Authority of Singapore's (MAS) policy decision on July 30 for the next catalyst.
"Singapore is unlikely to be singled out by the U.S. for additional tariffs, given that it has a bilateral trade deficit with the United States. Regional safe-haven properties are also likely to be supportive for the SGD," Maybank analysts wrote.
Taiwan's dollar continued to be investors' top bets in the region. It has appreciated nearly 12% against the U.S. dollar this year, making it the best-performing unit in the region.
Long positions on the Taiwan dollar remained entrenched in the bullish territory, but were off a multi-year high scaled in the previous survey.
Bullish bets on the Chinese yuan were largely unchanged, while those on the South Korean won touched their lowest since early May. Long bets on Thai baht also edged higher.
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: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the 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 are provided below (positions in U.S. dollar versus each currency):
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