Bearish tactics change in Asia's trading
According to Reuters poll, investors are cutting bearish tactics on Asian currencies. Their behaviour is dictated by active efforts of Chinese authorities aimed at restarting the economy, as well as reducing anxiety concerning dollar liquidity.
The cautious optimism is based on the news about large bank injections that are stabilising emerging markets, as well as possible levelling off of the pandemic. Traders are expecting China to rapidly enhance stimulus measures and shake up the regional trade. Short bets on the RMB are at their lowest level since early December of 2019.
Indonesian rupiah is also experiencing growth on forex market. Traders are reassured by the repo line, which the Indonesian central bank has secured with the Federal Reserve.
Taiwan and South Korea are also handling the pandemic well, their currencies are also showing signs of resurgence. Nevertheless, traders are still cautious, as the regional GDP is expected to reduce for the first time since 1992.
Federal Reserve’s action are a major boon for Asian currencies. The institution has been actively implementing measures to reduce the toll of the coronavirus on the american economy, which have reduced demand for dollar and gave taken some pressure off Asian currency and bond markets.