Bearish bets on Asian currencies rise as Mideast war stokes energy shock worries

March 5 (Reuters) – Short positions on most Asian currencies have crept higher as an escalating war in the Middle East has stoked worries over the crippling effect high energy prices could have on several economies ‌in the region, a Reuters poll showed on Thursday.

Global oil and gas prices have surged sharply as the U.S.-Israeli war on Iran paralyses shipping through the Strait of Hormuz, threatening to unleash a wave of inflation on net energy-importing Asian countries such as South Korea, Taiwan, India, Thailand, and the Philippines.

Currencies of these countries weakened significantly earlier in the week: South Korea’s won fell to its weakest level since March 2009, while Taiwan’s dollar hit its lowest point since May last year.

The Indian rupee slumped to a ⁠record low of 92.3025 a dollar, while the Thai baht and the Philippine peso hit multi-week lows.

“Concerns of inflation, growth on Asian economies may come at some point if energy price gains are sharp and prolonged,” OCBC FX Strategists Sim Moh Siong and Christopher Wong wrote.

“Given the high sensitivity of these currencies to market developments and high dependence on oil imports – KRW, TWD, INR, PHP – may underperform more.”

These views were reflected in the shift in investor positioning over the fortnight.

Short bets on South Korea’s won and Taiwan’s dollar climbed to their highest in six weeks, the survey of 10 currency and macro strategists showed, amid worries over surging energy prices and the threat of disruption to supplies of key semiconductor manufacturing materials.

The won came under added pressure after the benchmark KOSPI index (.KS11), opens new tab slumped 18% over two days, erasing 817.6 trillion won ($557.4 ‌billion) ⁠in market value.

“If the shock in oil prices persists, we see room for a further rise in USD-KRW, as risk assets will likely continue to face pressure and outflows,” BNP Paribas rates and FX strategists wrote.

In Southeast Asia, bearish bets on the Indonesian rupiah rose to a six-week high on concerns over the country’s weakening economic fundamentals and diminishing fiscal credibility.

Short bets on the Indian rupee , Asia’s worst-performing currency this year, opens new tab, also crawled higher, extending a bearish trend in ⁠place since mid‑June.

Elsewhere, bullish bets on the Malaysian ringgit stayed in the bullish territory on growth prospects, strong domestic fundamentals, and stable political backdrop.

Respondents also remained firmly bullish on the Chinese yuan , the highest among its emerging Asian peers, driven by a confluence of positive factors, including broad U.S. dollar weakness and ⁠seasonal export settlement demand, among others.

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):

Reporting by Sameer Manekar in Bengaluru; Editing by Mrigank Dhaniwala

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