Bearish bets mount on Asia FX as US election risks loom
Bears on yuan, ringgit at over 3-month high
Short bets on rupiah at highest since July. 11
Long bets on Singapore dollar cut significantly
By Roushni Nair
Oct 31 (Reuters) -Investors turned short on China's yuan, Malaysia's ringgit, and Thai baht for the first time since July, amid bets of a potential victory for Donald Trump in the U.S. election and the subsequent implementation of his proposed tariffs on Chinese goods.
Bearish bets on the yuan CNY=CFXS, ringgit MYR=, and baht THB=TH rose to their highest since July 25, while short positions on the Indian rupee INR=IN were at their highest since mid-November 2023, a Reuters poll of 13 respondents showed on Thursday.
Ahead of the Nov. 5 U.S. election, investors have been betting on a Trump victory by buying dollars and selling emerging market currencies, particularly the yuan, although opinion polls showthe presidential race between Trump and Kamala Harris remains too close to call.
Trump has vowed to slap tariffs of at least 60% on Chinese imports to revive American manufacturing. Trump's tax and tariff proposals are expected to drive up inflation that could lead to higher U.S. interest rates andundermine the currencies of trading partners.
Malaysia's economic fortunes are closely tied to China, its largest trading partner, which has also invested heavily in the country's manufacturing, infrastructure, and real estate sectors.
"If Trump wins the election, he may escalate trade tensions with China, which could negatively impact the Malaysian economy, leading to a potential underperformance of the ringgit, similar to the trend seen with the Thai baht," said Poon Panichpibool, a markets strategist at Krung Thai Bank.
Meanwhile, short positions on the Indonesian rupiah IDR= rose to their highestsince July 11.
The rupiah's near 4% slide from its September peak has policymakers on high alert but thenew cabinet is expected to maintain existing policies,which should lift investor confidence and stabilize the currency.
Investors boosted shortpositions on the South Korean won KRW=KFTC and the Taiwanese dollar TWD=TP.
South Korea, home to Samsung, and Taiwan, where the world's largest independent semiconductor foundry Taiwan Semiconductor Manufacturing Company (TSMC) is based, are crucial players in the global chip industry due to their advanced manufacturing capabilities and cost competitiveness.
The South Korean won may face additional weakness due to potential rate-cut risks from the Bank of Korea and a sell-off in the semiconductor sector, which has been underperforming lately after disappointing earnings reports from companies like Advanced Micro Devices AMD.O and Semiconductor Manufacturing International 0981.HK, Panichpibool said.
In India, foreign investors have taken out money from the country at a record pace this month amid expensive valuations and China's stimulus plans, piling pressure on the rupee.
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 |
31-Oct-24 | 0.30 | 1.06 | -0.03 | 0.59 | 0.60 | 0.82 | 0.11 | 0.81 | 0.09 |
17-Oct-24 | -0.43 | 0.26 | -0.44 | 0.04 | 0.24 | 0.67 | -0.40 | 0.26 | -0.28 |
03-Oct-2024 | -1.14 | -0.79 | -1.26 | -1.08 | -0.59 | -0.04 | -1.18 | -0.70 | -1.45 |
19-Sep-2024 | -0.67 | -0.90 | -1.12 | -1.18 | -0.66 | 0.33 | -1.30 | -1.10 | -1.33 |
05-Sep-24 | -0.85 | -1.09 | -1.26 | -1.05 | -0.77 | 0.21 | -1.46 | -1.00 | -1.22 |
22-Aug-24 | -0.62 | -0.93 | -1.08 | -1.26 | -0.70 | 0.21 | -1.57 | -1.03 | -1.16 |
08-Aug-24 | -0.02 | 0.05 | -0.61 | -0.02 | 0.59 | 0.60 | -0.78 | -0.29 | -0.57 |
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 |
Reporting by Roushni Nair in Bengaluru; Editing by Eileen Soreng
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