Sentiment towards emerging Asian currencies deteriorated in the last two weeks on growing views of a US rate rise in December with bearish bets on the Chinese yuan and the Indian rupee hitting their largest in two months, a Reuters poll showed. The yuan's short positions rose to their largest since early September, according to the survey of 19 fund managers, currency traders and analysts conducted from Monday through Thursday. That came after the renminbi last week suffered its largest weekly loss since China surprisingly devalued the currency on August 11.
Growth in China's factory output eased in October and investment inched lower. Consumer inflation cooled more than expected, while exports and imports also fell more than predicted. All the data point to the world's second-largest economy facing deflationary pressure and needing more stimulus. The yuan came under further pressure from uncertainty over when the International Monetary Fund will discuss whether to include the currency in its reserve currency basket. The IMF said a specific date for the decision had not been set yet. The rupee's bearish bets hit their largest since early September. The Indian currency on Monday touched its weakest since September 16 after Prime Minister Narendra Modi's heavy defeat in Bihar's state elections raised concerns the government would struggle to pass policy reforms.
Short positions in the Philippine peso jumped to their highest since late August on continuous stock outflows. The peso hit a six-year low on Tuesday after data showed the country's exports in September posted the steepest decline in four years. Foreign investors were net sellers in Manila's equity market over the previous 18 weeks, according to Philippine Stock Exchange data. Bearish bets on other Asian currencies - the South Korean won, the Singapore dollar, the Taiwan dollar , the Malaysian ringgit and the Thai baht - increased to their highest since early October. Such pessimism comes as the Federal Reserve is widely expected to raise interest rates next month for the first time in nearly a decade following solid US jobs data last Friday.
US employers added 271,000 jobs in October, far exceeding a forecast of 180,000 in a Reuters poll. The US unemployment rate fell to 5.0 percent, the lowest since April 2008. The Indonesian rupiah's short positions did not change. The Jakarta Post quoted the central bank governor as saying Bank Indonesia would focus on stability over growth in setting monetary policy, indicating interest rates would be kept on hold for a while. Indonesia also sold 9 trillion rupiah
($662 million) worth of bonds at an auction, above the indicative target of 6 trillion rupiah. 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. The figures include positions held through non-deliverable forwards (NDFs).
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