Quick bets on Asian FX rise as Omicron uncertainty grips markets: Reuters ballot By Reuters

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© Reuters. FILE PHOTO: Chinese Yuan and US Dollar banknotes can be seen in this image dated February 10, 2020. REUTERS / Dado Ruvic / Illustration // File Photo

From Harish Sridharan

(Reuters) – Investors became increasingly pessimistic on most Asian currencies as the discovery of a potentially vaccine-resistant variant of the coronavirus and subsequent restrictions on mobility by multiple countries weakened risk appetite, a Reuters poll found Thursday.

Bullish bets on the Indonesian rupiah and Malaysian ringgit were reversed, while short positions on the Thai baht, Singapore dollar and South Korean won increased, a poll of 10 respondents found.

Long bets on the yuan consolidated and were at their highest level since early June, however, as strong corporate demand for the Chinese currency pushed it up against broad dollar strength and provided some support for currencies in the region.

Traders say strong corporate demand and China’s tough virus measures and travel restrictions should continue to prop up the yuan. [CNY/]

“The Omicron (coronavirus) variant is the latest uncertainty in the world of the pandemic and is increasing demand for CNY amid China’s zero-covid management that could give the currency some security as a safe haven,” Maybank analysts said.

Many Asian countries have already closed their borders to visitors from several South African countries, including South Africa – where the variant was first discovered.

“The most important things to know about Omicron are its levels of infection, the severity of the infection itself, and the effectiveness of existing vaccines,” said Sim Moh Siong, a foreign exchange strategist at the Bank of Singapore.

Initial indications that Omicron may be more contagious than previous variants have rocked financial markets as new restrictions could stifle a cautious rebound from the economic devastation of the 2020 pandemic.

“The Omicron variant brings with it uncertainty as to how quickly the economies can now be reopened,” said Siong.

Earlier this week, Singapore authorities said the city-state would withhold further reopening measures even after vaccination of all eligible people against COVID-19 is completed.

Short bets on the Singapore dollar rose to its highest level since mid-August.

Investors increased their bearish bets on the baht after being lowered two weeks ago as the possibility of travel restrictions threatens Thailand’s efforts to revitalize its troubled tourism industry.

Meanwhile, crisis rates threatened to end in the United States after Fed chairman Jerome Powell followed restrictive comments and sparked further sell-offs on riskier Asian assets.

Investors also increased their short positions in the won as coronavirus cases hit record highs in South Korea and authorities temporarily suspended quarantine exemptions for fully vaccinated travelers.

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

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

The figures include positions held via non-deliverable forwards (NDFs).

The survey results are shown below (positions in US dollars versus each currency):

DATE USD / C USD / K USD / S USD / I USD / T USD / I USD / M USD /

NY RW GD DR WD NR YR PHP

02-Dec. -0.88 1.06 0.58 0.15 0.00 0.47 0.28 0.26 0.71

-21

18-Nov. -0.87 0.48 0.07 -0.72 -0.15 0.08 -0.04 0.24 0.12

-21

04-Nov. -0.51 0.63 -0.09 -0.41 0.10 0.54 -0.07 0.27 0.66

-21

21-Oct. -0.55 0.91 -0.27 -1.12 0.30 0.70 0.10 0.44 1.10

-21

07-Oct. 0.27 1.35 0.20 -0.29 0.28 0.10 0.30 0.84 1.20

-21

23-Sep 0.25 0.96 -0.15 -0.50 -0.20 -0.45 0.25 0.56 0.75

-21

09-Sep -0.09 0.33 -0.36 -0.44 -0.69 -0.88 0.23 0.40 0.12

-21

26-Aug. 0.43 0.87 0.47 0.18 0.33 -0.08 1.19 0.78 1.35

-21

August 12 0.32 0.69 0.77 0.20 -0.09 0.37 1.39 1.17 1.75

-21

July 29th 0.27 0.78 0.71 0.27 0.36 0.29 1.4 1.21 1.49

y-21

July 15 -0.15 0.27 0.53 0.23 0.13 0.68 1.06 1.06 1.56

y-21

July 01 -0.29 -0.29 0.02 0.36 -0.19 0.5 0.49 -0.0 0.85

y-21 4

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