© Reuters. FILE PHOTO: South Korean won, Chinese yuan, and Japanese yen bills are seen on US $ 100 bills in this illustrated image taken in Seoul.
By Anushka Trivedi (Reuters) – Investors reduced their long positions in Asian currencies as the outlook for emerging market debt deteriorated after US yields soared, according to a Reuters poll, with bets almost reduced to half in the South Korean won and the Taiwan dollar. The dollar has recovered some losses since benchmark Treasury yields rose to more than 1% after Democrats captured the United States Senate last week, making it easier to pass a large fiscal stimulus to through the issuance of debt. As a result, bullish bets on the Singapore dollar, Malaysian ringgit and Thai baht were cut for the first time since COVID-19 vaccines were announced in early November, the survey of 15 respondents showed. “The bond market is being cautious about an increase in supply and a potential increase in fiscal stimulus from the incoming administration of US President Joe Biden that is resulting in higher yields,” said Mitul Kotecha, senior emerging markets strategist at TD. Securities. “Therefore, the yield differential with some of the Asian currencies looks less attractive.” Market participants were also concerned about the resistance of Asian central banks to currency gains, he added, noting that the People’s Bank of China expressed its displeasure over the rapid rise of the yuan. However, several analysts agreed that this slowdown in sentiment would be short-term, betting on the launch of vaccines and a rebound in exports to lead the recovery of Asian trade-dependent economies in 2021. The underperforming South Korean won saw trim the bullish outlook. its lowest level in three months, with investors concerned about the deterioration of the COVID-19 situation in the country after the third wave of infections last month nearly broke their healthcare system. The won has lagged its peers since then, while stocks and bonds were sold heavily by foreign investors in December. Bullish bets on the Taiwanese dollar, Asia’s best performing currency in 2020, and the yuan slightly unraveled after central banks took steps to curb their rising local currencies. Sources told Reuters that Taiwan’s central bank asked banks operating foreign exchange transactions to exercise restraint a week after it intervened to keep the local currency under control. Meanwhile, the People’s Bank of China implemented measures to curb capital inflows and prevent the yuan from moving too fast after it surpassed the crucial 6.50-to-the-dollar mark earlier this year. The Reuters survey focuses on what analysts believe are current market positions in nine Asian emerging market currencies: the Chinese yuan, the South Korean won, the Singapore dollar, the Indonesian rupiah, the Taiwanese dollar, the rupiah. India, the Philippine peso, the Malaysian ringgit, and the Thai baht. . The survey 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 in US dollars. Figures include positions held through non-deliverable forward contracts (NDF). The results of the ASIAPOSN survey are provided below (positions in US dollars against each currency): Date USD / C USD / K USD / S USD / I USD / T USD / I USD / M USD / P USD / TH NY RW GD DR WD NR YEAR HP (NYSE 🙂 B Jan 14 -1.21 -0.87 -0.83 -0.57 -0.89 -0.22 -0.30 -0.80 -0, 50 Dec 10 -1.53 -1.68 -1.11 -0.61 -1.6 -0.2 -0.53 -0.97 -0.87 Nov 26 -1.43 -1.29 -1.01 – 0.92 -1.08 -0.3 -0.75 -0.8 -0.66 Nov 12 -1.28 -1.52 -0.99 -1.01 -1.08 -0.26 -0.44 -0.67 -0.8 Oct 29 -0.86 -1.14 – 0.49 0.09 -1.23 -0.07 -0.03 -0.09 -0.02 Oct 15 -1.07 -0.94 -0.72 0.35 -1.12 -0.44 -0.33 -0.15 0.1 Oct 1 -0.47 -0.53 -0.25 0.61 -0.68 -0.31 -0.31 -0.68 0.38 Sep 17 -1.25 -0, 6 -0.61 0.39 -0.51 -0.54 -0.89 -1.07 -0.17 Sep 3 -1.41 -0.71 -0.99 -0.19 -0, 4 -0.91 -0.96 -1.34 -0.15 Aug 20 -1.02 -0.71 -0.69 0.43 -0.31 -0.35 -0.62 -1, 12 -0.21 06-Aug -0.81 -0.44 -0.57 0.45 -0.54 -0.31 -0.29 -0.76 -0.2