Short positions on the Indonesian rupiah rose to their highest since the 2008 global financial crisis and analysts remain pessimistic across Asian currencies, a Reuters poll of 12 currency market analysts showed. Bearish bets on the rupiah were at their highest since the November 2008 Reuters FX positioning survey.
That followed a near-4 percent fall in the currency last month, its worst monthly performance in more than three years, according to indicative prices on Thomson Reuters. "In the past there were controls by Bank Indonesia to prevent the rupiah from weakening but since those controls were loosened, market players started to price in more rupiah depreciation," said Chin Thio, senior foreign exchange and interest rate strategist.
Though analysts say the underlying trend in Southeast Asia's largest economy is still positive, confidence is waning with worrisome economic data adding to concerns of investors who have sold off rupiah assets this year despite Indonesia's upgrade to an investment grade status.
"It (rupiah depreciation) may not be a one-off depending on the situation in Europe. It is still early days to say the worst is over," Thio added. The rupiah was quoted at 9,430 per dollar on Friday. Analysts were slightly less pessimistic on the Korean won after taking their most negative position in three years of Reuters surveys in the previous poll, as well as the battered Indian rupee which tumbled more than 6 percent in May against the dollar and has hit successive record lows in recent months.
"Given the extent of carnage in May it (the rupee) is well positioned," said Tim Condon, chief economist for Asia at ING. He said there would be solid support for dollar/rupee at around 52 and the rupee could regain some of the losses it saw in May. The rupee was trading at 55.24 per dollar on Friday.
Short positions in the Chinese yuan reached its highest reading since the April 2010 survey when Reuters started covering the renminbi's positions. The yuan recorded its largest one-month drop in history, losing nearly 1 percent against the dollar last month. After tumbling in May on deepening worries about the euro zone's debt crisis, Asian currencies have somewhat recovered, supported by hopes of a rescue plan for Spain's ailing banks.
However, the safe-haven appeal of Asian markets will ensure currencies in the region end 2012 stronger than they are now, despite the risks posed by Europe, a separate Reuters poll showed. This Reuters survey focused on what analysts believe are the current market positions in nine Asian emerging market currencies: Chinese yuan, South Korean won , Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and 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 on dollars. The figures included positions held through non-deliverable forwards (NDFs).
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