Investors turn long on Singapore dollar after 7 months; bearish bets on Asian FX ease
Long bets on Singapore dollar at over 1-year high
Short bets on Taiwanese dollar, Chinese yuan at 1-month high
Bearish position on most Asian FX ease
By Roushni Nair
July 25 (Reuters) -
Investors turned bullish on the Singapore dollar for the first time since mid-December as the city-state's growth and inflation dynamics continue to support the local unit, while bearish betson most Asian currencies eased, a Reuters poll found on Thursday.
Long positions on the Singapore dollar SGD= were at their highest since early April 2023, while bearish bets on the Malaysian ringgit MYR= fellto levels seen in April last year,according to a fortnightly poll of 10 analysts.
The Monetary Authority of Singapore (MAS) does not seem to be in a hurry to ease policy settings after a core inflation reading of above 3% in May with growth in the second quarter coming in strong at 2.9%, according to analysts.
MAS will conclude its policy meeting on Friday, withanalysts expectingthe central bank to maintain its hawkish stance and hold on to its current policy settings even as inflation in June was at a two-year low.
"The strong data (growth and inflation) and the continued appreciation of the SNEER (Singapore dollar nominal effective exchange rate) make us continue to like the SGD on a relative-value basis and against low-yielders in the region," analysts at Bank of America said in a note.
However, any spike in oil prices due to geopolitical events would exert upside pressure on Singapore dollar's safe-haven status, they added.
Singapore is among the few countries in the world with a triple-A sovereign credit rating that is reflective of exceptionally strong fiscal and external balance sheets, factors that firm its position as a safe harbor for investors.
Meanwhile, markets have priced in a 100% chance of an interest rate cut by the U.S. Federal Reserve as early as September, with investors awaitinga slew of macroeconomic data, including second-quarter growth figures, to further validate their bets. FEDWATCH
Declininginterest rates in the U.S. would take the shine off the dollar as it could lead to lower foreign investments while triggering a risk-on sentiment for emerging Asian currencies.
This has resulted inshort bets on the Philippine peso PHP= and Thailand's baht THB=TH also easingsignificantly.
Bearish positions on the Chinese yuan CNY=CFXS and the Taiwanese dollar TWD=TP were at their highest since June 27.
Markets in Taiwan extended losses, pressured by statements from Washington last week that hinted at the possibility of tougher curbs for exports of advanced semiconductor technology to China.
Taiwan markets were closed for a second successive day because of bad weather.
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 ASIAPOSN are provided below (positions in U.S. dollar versus each currency):
DATE | USD/CNY | USD/KRW | USD/SGD | USD/IDR | USD/TWD | USD/INR | USD/MYR | USD/PHP | USD/THB |
25-Jul-24 | 1.07 | 0.79 | -0.33 | 0.35 | 0.86 | 0.12 | 0.39 | 0.43 | 0.02 |
11-Jul-24 | 1.05 | 0.87 | 0.06 | 0.73 | 0.68 | 0.22 | 1.03 | 0.86 | 0.51 |
27-Jun-24 | 1.34 | 1.28 | 0.80 | 1.49 | 0.88 | 0.46 | 1.00 | 1.37 | 0.91 |
13-Jun-24 | 0.95 | 0.87 | 0.62 | 1.22 | 0.64 | 0.37 | 1.00 | 1.23 | 0.92 |
30-May-24 | 1.05 | 0.72 | 0.33 | 0.94 | 0.53 | 0.00 | 0.81 | 1.19 | 1.00 |
16-May-24 | 1.05 | 0.96 | 0.35 | 0.96 | 1.02 | 0.39 | 1.23 | 1.29 | 1.00 |
2-May-24 | 1.25 | 1.61 | 0.89 | 1.39 | 1.40 | 0.49 | 1.46 | 1.44 | 1.39 |
18-Apr-24 | 1.25 | 1.59 | 0.80 | 1.32 | 1.24 | 0.43 | 1.42 | 1.19 | 1.28 |
4-Apr-24 | 1.18 | 1.09 | 0.42 | 1.13 | 1.17 | 0.00 | 1.15 | 0.62 | 1.35 |
21-Mar-24 | 0.92 | 0.82 | 0.33 | 0.60 | 0.92 | -0.54 | 1.12 | 0.47 | 1.13 |
Reporting by Roushni Nair in Bengaluru; Editing by Sonia Cheema
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