JPMorgan Asset Management Trims Long CNY Position, Favors KRW Rebound
0xBroomberg
JPMorgan Asset Management — $4.3 trillion in assets — is cutting its long-yuan position and rotating into harder-hit Asian currencies like the won, signaling that this year's most crowded Asian FX trade is fading.
The yuan rallied hard — why pull back now?
The yuan is up roughly 3% this year at about 6.79 per dollar, a near-four-year high — the best-performing Asian currency of 2025.
But Julio Callegari, JPMorgan Asset Management's Asia fixed-income CIO, says the rally has entered a consolidation phase — prices plateauing after a strong run.
This means → the yuan isn't about to fall, but the easy upside is gone and the risk-reward has weakened.
Where is the money going instead?
JPMorgan AM has rotated into Philippine peso and Mexican peso — higher-yielding currencies that pay a carry just for holding them.
Callegari's logic: when the dollar weakens, currencies that fell furthest bounce hardest — a catch-up effect.
In plain terms = the more you compress a spring, the harder it snaps back. The yuan spring has already released most of its energy; others are still coiled.
Why is the Korean won singled out?
The won is one of Asia's worst-performing currencies this year. Callegari calls it one of the biggest potential FX "surprises" before 2027.
The trigger: a market re-pricing of the Fed's policy path plus a US equity pullback → deeply undervalued Asian currencies re-rate sharply, and the won benefits most.
This reflects a positioning bet — not that Korea's fundamentals are strong, but that the won has been beaten down so far it carries the most snapback potential.
Has the yuan peaked?
Callegari is not bearish on the yuan. With China's trade and current-account surplus intact, a further dollar decline could push the yuan to 6.5 by year-end.
Yet he expects the yuan to underperform other currencies inside the CFETS basket — China's trade-weighted currency index used to gauge the yuan's broad strength.
This means → the yuan can still appreciate, but its neighbours may catch up or overtake it — and that relative underperformance is the core reason for trimming.
What signals matter in the second half?
Multiple institutions have already cut yuan longs. The currency has pulled back from its strongest level since 2023, hit last month.
Consensus around the long-yuan trade is loosening. Whether previously overlooked currencies like the won can stage a catch-up rally is the key test for Asian FX in H2.
In plain terms = the yuan trade wasn't wrong — it's just that the easiest-money phase is over. The next returns may come from a different currency.
Content is for reference only, not financial advice.