Asian currency bears retreat after less aggressive start to Trump’s tariff plans – Reuters Reuters poll
Adwitiya Srivastava and Himanshi Akhand
(Reuters) – Investors trimmed falling bets on most Asian currencies after U.S. President Donald Trump’s inaugural policy suggested he would negotiate rather than immediately impose heavy tariffs on trading partners, a Reuters poll showed on Thursday.
Short bets on the Chinese yuan, Taiwan dollar and Thai baht were lower than two weeks ago, according to a survey of 11 respondents.
Short positions in the South Korean won – the best performing Asian currency so far in January – were also lower.
Many investors expected the tariffs to be among a series of executive orders signed by Trump on his first day in office. However, signs of a measured approach weakened the dollar and fueled risk-on sentiment against Asian currencies.
Trump said his administration is considering imposing a 10% tariff on goods imported from China and around 25% duties on Mexico and Canada starting February 1.
“As long as market players are confident that the Trump 2.0 government will not quickly implement tariff increases and that the size of the tariff increase will not be as severe as previously thought, we could see Asian FX supported by such views and a slightly weaker US dollar, as well as muted/reduced movement in UST-10y yields,” said Poon Panichpibool, market strategist at Krung Bank of Thailand.
Short bets on the Singapore dollar also eased. Lower inflation and stronger growth have created room for Singapore’s monetary authority to ease policy settings at its review on Friday, although analysts are divided on whether the central bank will wait to assess the impact of Trump’s policies.
Bucking the trend, short bets on the Indian rupee rose to the highest since mid-July 2022.
The rupee has fallen about 3% since Trump won the US election and is the second-worst among regional peers this month.
“INR overvaluation, growing RBI book and broad USD strength remain factors likely to push INR weaker,” Barclays (LON: ) analysts said in a note, adding that foreign outflows in the stock market have also weighed on the rupee at a time when foreign reserves are falling.
Bearish bets on the Indonesian rupiah also rose to the highest since November 2022.
Last week, Bank Indonesia (BI) surprised markets by unexpectedly cutting interest rates to boost economic growth.
Analysts at Barclays said the rupee is losing its benchmark interest rate.
“The shift in BI’s stance to a more dovish, pro-growth stance should open up further upside for the USDIDR.”
The Asian Currency Positioning Survey focuses on what analysts and fund managers believe are the current market positions in 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, Malaysian ringgit and 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 for the US dollar.
Figures include positions held through non-deliverable forwards (NDFs).
The survey findings are listed below (US dollar positions against each currency):
DATE
January 23-25 1.33 1.04 1.11 1.50 1.01 1.78 1.01 0.77 0.54
January 9, 25 1.65 1.75 1.34 1.20 1.18 1.69 0.99 0.65 0.76
December 12, 24 1.15 1.86 0.83 0.87 0.82 1.43 0.65 0.53 0.26
November 28, 24 1.32 1.45 1.12 1.03 1.10 1.13 0.76 1.13 0.66
November 14, 24 1.14 1.61 0.80 0.81 1.07 0.87 0.65 1.18 0.90
31 October 24 0.30 1.06 -0.03 0.59 0.60 0.82 0.11 0.81 0.09
October 17, 24 -0.43 0.26 -0.44 0.04 0.24 0.67 -0.40 0.26 -0.28
03 October 24 -1.14 -0.79 -1.26 -1.08 -0.59 -0.04 -1.18 -0.70 -1.45
19 September 24 -0.67 -0.90 -1.12 -1.18 -0.66 0.33 -1.30 -1.10 -1.33
September 5, 24 -0.85 -1.09 -1.26 -1.05 -0.77 0.21 -1.46 -1.00 -1.22
