SINGAPORE: Sentiment toward most emerging Asian currencies improved in the last two weeks helped by the prospect of more gradual US rates rises and further European monetary policy easing, while a rebound in oil also boosted risk assets, a Reuters poll showed.
The Chinese yuan's bearish bets fell to their lowest since late November, according to a survey of 20 fund managers, currency traders and analysts conducted from Tuesday through Thursday.
The renminbi on Monday posted its largest daily gain since China's currency revaluation in July 2005 as the central bank set its daily guidance rate sharply firmer after the week-long Lunar New Year holiday.
In an interview carried in the Chinese financial magazine Caixin over the weekend, People's Bank of China Governor Zhou Xiaochuan said yuan exchange rate reforms would help the market be more flexible in dealing with speculative forces betting on yuan depreciation.
Zhou commented there was no basis for the yuan to keep falling, and China would keep it stable versus a basket of currencies while allowing greater volatility against the dollar.
Signs of the yuan's stabilisation, along with expectations that major central banks may take easier monetary policy stances, improved sentiment on emerging Asian currencies.
Federal Reserve policymakers worried last month that a global slowdown and financial market sell-off could hurt the US economy and considered changing the central bank's planned interest rate hike path for 2016. St. Louis Fed President James Bullard, one of the US central bank's most prominent advocates of higher borrowing costs declared it "unwise" to move any further in light of weak inflation and global volatility.
European Central Bank President Mario Draghi repeatedly pledged to ease monetary policy in March.
Indonesia's rupiah reported bullish positions for the first time since November 2014 as investors hunted for one of the highest government bond yields in Asia.
Views on the Malaysian ringgit became the least bearish since late April 2015. The country has seen investors returning to local bonds amid a rebound in oil prices on hopes of a deal to freeze production. Higher crude prices eased concerns over the country's falling oil and gas revenues.
Malaysia's economy in the fourth quarter grew 4.5 percent from a year earlier, beating forecasts. Its current account surplus in the October-December period more than doubled from the previous three months.
Sentiment on the Thai baht has became nearly neutral, the best since mid-April 2015 on inflows to short-term debt.
The baht hit a near four-month high last week, supported by demand from gold exporters. The precious metal last week rose to one-year highs and Thai gold investors cut holdings in the physical metal or in gold futures on its rallies.
Sentiment on the Singapore dollar and the Taiwan dollar became the least pessimistic since October, tracking improvement in the yuan's views.
The South Korean won's pessimistic positions barely moved with outlook on the currency the worst in the region on growing geopolitical tensions with the North and expectations for further interest rate cuts.
The won hit a 5-1/2-year low on Wednesday on bond outflows and increasing dollar demand among offshore funds to hedge against the falling Korean currency.
India's rupee reported slightly larger bearish bets as the currency touched a 2-1/2-year trough on concerns over capital outflows.
The 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 US dollars.
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