By Roushni Nair
(Reuters) – Investors pared bearish bets on Asian currencies as the U.S. dollar faltered, with markets increasingly anxious that President Donald Trump’s protectionist trade agenda could derail growth in the world’s largest economy, a Reuters poll showed on Thursday.
Short positions on China’s yuan fell to their lowest since January 2024 while bearish bets on the South Korean won retreated to levels not seen since mid-October, according to a fortnightly survey of 11 respondents.
In a significant shift, analysts turned bullish on the Philippine peso for the first time since early October, with long positions reaching their highest in over three months.
Currency markets have pivoted in recent months as traders reassess their earlier view that Trump’s policies would bolster the dollar, with the greenback instead weakening amid concerns his aggressive tariff agenda could trigger a broader economic slowdown, with sentiment indicators deteriorating.
The dollar index, which measures the currency against six key rivals, has dropped over 6% from the more than two-year peak of 110.17 hit in mid-January. It was at 103.4 by 0635 GMT, struggling to make a decisive move away from a five-month low of 103.21 touched last Tuesday.
The specter of an escalating tariff war threatens to hamper global growth and trade while eroding market confidence and pressuring Asian currencies ahead of the April 2 reciprocal tariff deadline, Christopher Wong, FX strategist at OCBC, said.
Investors also scaled back short positions on the Singapore dollar and Indonesian rupiah to their lowest since July 11 and December 12, respectively.
Despite the improved sentiment, the rupiah remains the region’s worst performer this year, down over 2% against the dollar, as investors fret over fiscal sustainability and uncertainty surrounding President-elect Prabowo Subianto’s ambitious spending plans and speculation that reputed finance minister Sri Mulyani may resign.
“My outlook for EM currencies in Asia, including IDR, is that they will likely be rangebound for the time being as such uncertainties remain but additional factors to worsen the current situations are not expected for now,” said Ryota Abe, an economist at SMBC.
The survey responses were collected before Bank Indonesia maintained its policy rate on Wednesday and the Federal Reserve held rates steady while signalling two potential quarter-point cuts this year—decisions that further calmed investor sentiment across Asian markets.
Analysts have turned decidedly bullish on Philippine markets, citing cooling inflation, expected rate cuts and insulation from Trump’s tariff threats, with sentiment further bolstered as the country launched its three-month campaign period for May’s midterm elections.
In China, Beijing unveiled sweeping consumption-boosting measures including income hikes and childcare subsidies, days after regulators urged credit easing—moves analysts say could revitalize Southeast Asia’s largest trading partner.
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 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
20-Mar-25 0.24 0.72 0.15 0.97 0.85 1.09 0.42 -0.13 0.08
06-Mar-25 0.77 1.00 0.34 1.36 0.71 1.47 0.45 0.20 0.48
20-Feb-25 0.88 0.83 0.31 1.06 0.59 1.22 0.37 0.31 0.02
06-Feb-25 1.15 1.01 0.86 1.25 1.14 1.98 0.62 0.93 0.23
23-Jan-25 1.33 1.04 1.11 1.50 1.01 1.78 1.01 0.77 0.54
09-Jan-25 1.65 1.75 1.34 1.20 1.18 1.69 0.99 0.65 0.76
12-Dec-24 1.15 1.86 0.83 0.87 0.82 1.43 0.65 0.53 0.26
28-Nov-24 1.32 1.45 1.12 1.03 1.10 1.13 0.76 1.13 0.66
14-Nov-24 1.14 1.61 0.80 0.81 1.07 0.87 0.65 1.18 0.90
31-Oct-24 0.30 1.06 -0.03 0.59 0.60 0.82 0.11 0.81 0.09
(Reporting by Roushni Nair and Himanshi Akhand in Bengaluru; Editing by Mrigank Dhaniwala)
