Sentiment towards most emerging Asian currencies worsened in the last two weeks with short positions in India's rupee near a two-year high as expectations firmed that US interest rates will move higher by year end, a Reuters poll showed on Thursday. The Chinese yuan was an exception as its long positions hit a seven-month high, according to the survey of 20 currency analysts at banks and fund managers conducted between Tuesday and Thursday.
-- Rupee short positions highest since August 2013
-- Baht bearish bets largest since January 2014
Short positions in the rupee reached their largest since August 2013 as the currency fell on expectations the Reserve Bank of India will deliver its third rate cut this year at next week's policy review, and on month-end corporate dollar demand. Bearish bets on the won jumped to the highest since mid-March as the yen plunged to its lowest in almost 13 years against the dollar. That drove the won
to a seven-year peak against the Japanese unit and spurred currency intervention by South Korea's foreign exchange authorities. The authorities have been spotted in efforts to curb the won's strength against the yen to relieve pressure on South Korean companies, which compete against Japanese rivals for key products such as cars.
Short positions in the rupiah also increased to the highest since mid-March on sustained corporate dollar demand. Persistent concerns over a slowdown in Southeast Asia's top economy and its chronic current account deficit were also factors boosting bearish bets on the rupiah. Much of the pessimism against regional currencies appears to have the US Federal Reserve as a trigger. Fed Chair Janet Yellen last week said interest rates are likely to rise this year but the pace of tightening will depend on the strength of economic data.
A gauge of US business investment spending plans rose solidly for a second straight month in April and consumer confidence perked up this month. New home sales rose last month. Thailand's baht suffered the largest short positions since January 2014 as foreign investors have been net sellers of local bonds so far this month. Last month, the Bank of Thailand surprised markets by cutting its key policy rate and relaxed curbs on capital outflows.
Pessimistic bets on the Singapore dollar grew to the largest since early April amid an uncertain outlook for the city-state's economy due to uneven global growth. Industrial output in April fell 8.7 percent from a year earlier, its worst contraction since at least April 2013, data showed on Tuesday. Consumer prices last month also posted their largest annual drop in five years.
The Malaysian ringgit's short positions rose as lower oil prices underscored concerns that low crude prices may hurt the country's trade and fiscal accounts. Malaysia is a net oil exporter. Sentiment on the Taiwan dollar turned bearish as the central bank stepped up its efforts to limit further appreciation in the best-performing Asian currency so far this year. The authority asked major custodian banks to look into foreign customers' transactions, a central bank official told Reuters on May 22.
Views on the Philippine peso also became pessimistic as growth in the first quarter unexpectedly slowed to a six-year low. The yuan bucked the regional trend as Chinese policymakers signaled their keenness to keep the currency stable. The renminbi hit a one-month high on May 22.
The currency poll is focused on what analysts 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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