Bears restrained for now but outflows, lockdowns pose hurdles for Asian FX

Investors trimmed short positions on most Asian currencies as massive stimulus measures to ease the economic pain of the coronavirus outbreak offered a degree of support, but strict lockdowns and a sustained flight out of regional assets continued to exert pressure, a Reuters poll found.
Central banks and governments from China to South Korea have unleashed unprecedented fiscal and monetary stimulus worth billions of dollars in a bid to stave off a recession and temper the devastating economic effects of movement curbs.
Intervention to combat the dual threat from the sudden liquidation of regional assets and a dollar funding shortage also helped ease bearish sentiment, the poll of 13 respondents showed.
Bearish bets on the South Korean won, Singapore dollar and Thai baht were reduced by the biggest margin, followed by the Malaysian ringgit and Philippine peso.
Apart from easing interest rates, South Korea has vowed to make emergency cash payments to families totalling 9.1 trillion won, while Singapore unveiled new measures worth more than $30 billion to help businesses and households.
Yet, most analysts cautioned while stimulus measures helped alleviate some stress, it is too early to look for green shoots of recovery yet.
"Policy measures don't kill the coronavirus and what is important next is whether those country lockdowns implemented across the world have been successful in containing the spread of COVID-19," Maybank analysts wrote in a note.
While sentiment towards most other units improved, the region's high yielders and carry trade favourites - the Indonesian rupiah and Indian rupee - found no such favour with investors.
Bearish positions on both currencies were unchanged over the last 14 days, remaining around their highest levels since October 2018.
The rupiah slid 14% last month, making it the region's worst performer for the period, and the Indian rupee lost 4.6%, battered by outflows in bonds and equities while persistent onshore demand for dollars made matters worse.
Foreign investors pulled out $8.13 billion from Indian debt securities in March against $300 million of investments a month earlier, while for Indonesia, outflows increased to $7.44 billion from $2.11 billion, according to government data.
"The INR remains a reduced value at risk proposition with 1.3 billion people in lockdown and the economy coming to a standstill," said Stephen Innes, chief global market strategist at Axicorp.
"Food chains in south and southeast Asia are more sensitive to supply disruptions related to travel times and cold storage, and the IDR and INR remain two of the most vulnerable."
India and Indonesia, the world's second and fourth most populous countries respectively, have taken strict measures to curb the spread of the virus but densely packed cities pose a steep challenge to enforcing social distancing.
The Asian currency positioning 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.