Bears raise rates on Thai baht, sentiment on other Asian currencies deteriorates

A two-month survey of 13 analysts showed short bets on the Thai baht were at their highest since January 2018 after a steady build-up since early March, when the war in Ukraine triggered a number of factors and put pressure on the tourism-dependent net oil importer.

Thailand, Southeast Asia’s second-largest economy, is one of the laggards in the policy normalization strategy long embraced by its peers and major central banks, raising risks of negative spending growth amid weak activity in China, the region’s largest economy. .

Thailand’s currency, the most traded among Asian units, has depreciated by about 14% since the Russian-Ukrainian conflict and by 10.3% since the beginning of the year, putting it at the bottom of the list.Scale with the Indian rupee and the South Korean won.

“Market participants remain bearish on the Thai baht against the US dollar until they are really confident that the US Federal Reserve will overcome the peak of hawkish policy,” said Poon Panihpibul, market strategist at Krung Thai Bank.

Still, he said, the dollar’s weakness after the Fed meeting would prompt investors to be bullish on the baht, building on recent greenbacks seen in tourism and the economy.

Overnight, the Fed raised rates by another 75 basis points (bps) and reaffirmed its determination to fight rampant inflation in the world’s largest economy, even as the economy faces weakness and a slowing labor market.

Analysts at Maybank, however, warned that while the US dollar fell after the Fed’s decision, Chairman Jerome Powell is “still hawkish”, which could keep the Fed on an aggressive tightening path, continuing to finally support the dollar, a safe haven.

Survey responses were collected prior to the Fed hike.

Elsewhere, sentiment toward the Philippine peso improved over the past two weeks after the Bangko Sentral ng Pilipinas raised its key interest rates by 75 basis points in mid-July in an out-of-cycle move.

The Chinese yuan, considered the safer bet among Asian currencies, was the second-worst in the region, while short positions in the Indian rupee, Indonesian rupiah and Malaysian ringgit eased slightly but remained insignificant.

The Asian Currency Positioning Study focuses on what analysts and fund managers believe are the current market positions of nine emerging Asian currencies: the Chinese yuan, the South Korean won, the Singapore dollar, the Indonesian rupiah, the Taiwan dollar, the Indian rupee, the Philippine peso, the Malaysian ringgit and Thai baht

The survey uses scores of net long or short positions on a scale of minus 3 plus 3. A score of plus 3 indicates that the market is significantly long in the US dollar.

Figures include positions held through non-deliverable forwards (NDFs).

The results of the survey are presented below (positions in US dollars against each currency):

DATE USD/CNY USD/KRW USD/SGD USD/IDR USD/TWD USD/INR USD/MYR USD/PHP USD/THB

July 28, 22 1.14 1.63 0.92 1.31 1.42 1.62 1.59 1.54 1.89

14 July 22 1.07 1.84 1.44 1.59 1.76 1.98 1.68 2.06 1.78

June 30, 22 1.09 1.69 1.08 1.5 1.15 1.8 1.63 2.05 1.39

16-Jun-22 1.54 1.79 1.35 1.33 1.23 1.66 1.67 1.7 1.34

02-Jun-22 1.22 0.56 0.38 0.9 0.73 1.18 1.06 0.59 0.54

19-May-22 1.9 1.55 1.07 1.19 1.63 1.35 1.53 1.15 1.56

05-May-22 1.75 1.5 0.73 0.56 1.49 1.04 1.47 1.09 1.33

21-Apr-22 0.1 1.07 -0.17 -0.03 0.94 0.75 0.89 1 0.71

07-Apr-22 -0.41 0.99 -0.46 -0.05 0.81 0.63 0.32 0.53 0.31

March 24, 22 -0.16 0.98 0.19 0.04 1.16 0.99 0.12 1.4 0.46

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