Investors wary of a slowdown in the South Korean economy stacked up bearish bets against the won in the past two weeks, a Reuters poll showed, while bullish bets on the Malaysian ringgit reversed on capital outflow fears. The US dollar's recent strength on the back of robust economic data also kept most regional units under pressure.
Short positions in the won were at their highest since the end of November, ahead of growth data released on Thursday, the poll of 15 respondents showed. All poll responses came in before the data was released. While markets had expected the first-quarter gross domestic product (GDP) growth to slow to the weakest pace in more than a year, Thursday's data showed the economy contracted at a pace last seen during the global financial crisis, as companies slashed investment and exports slumped in response to Sino-US trade tensions and cooling Chinese demand.
The won, which has been Asia's worst performing currency this year, weakened as much as 0.9 percent against the dollar to a more than two-year low after the GDP data. Meanwhile, market participants reversed bullish positions on the Malaysian ringgit despite the central bank's effort to allay fears of capital outflows after FTSE Russell flagged last week that it could drop the country from the FTSE World Government Bond Index over concerns about market accessibility and liquidity.
Investors were short on the currency for the first time in 2019, the poll showed. The unit was down about 0.2 percent on Thursday. Wagers on the Thai baht also slipped into bear territory after nearly four months of bullishness, as uncertainty over the country's political scenario hurt investor sentiment.
A month has passed since the Thai general elections, but the final allocation of 500 parliamentary seats still have not been confirmed. The third and largest phase of the seven-phase elections are underway.
Bullish bets on the yuan edged higher on expectation the central bank could put any broader policy easing measures on hold after recent signs of improvement in the world's second-largest economy. Long bets on the Philippine peso and the Indonesian rupiah also climbed.
The Reuters survey 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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