SINGAPORE: Investors scaled back bullish positions in several emerging Asian currencies, a Reuters poll showed, as they adopt a wait-and-watch approach on uncertainty ahead of the US presidential election and rising coronavirus cases globally.
Market participants turned almost neutral on the Philippine peso and the Indian rupee, while long positions in the Chinese yuan and the Singapore dollar were snipped, the fortnightly poll of 13 respondents showed.
The US dollar, considered a safe-haven asset during times of uncertainty, has strengthened in recent sessions as escalating coronavirus cases, particularly in Europe, stoked fears of fresh lockdowns that would hamper a global economic rebound.
The greenback's appeal may be enhanced further in the near-term as markets brace for the Nov. 3 election in the United States, which analysts have warned could induce even more volatility.
"There are two dimensions of risk as we head into the US elections - election outcome and outcome uncertainty," analysts at Singapore-based bank DBS said in a note last week.
"The prospect of a contested election leading to risk aversion is significant."
Investors also cut long bets on the Malaysian ringgit, as a leadership challenge to Prime Minister Muhyiddin Yassin stokes political uncertainty at a time when the country is already grappling with rising coronavirus infections.
Taiwan's dollar and South Korea's won continued to be the stand out picks, with long bets on both currencies nudged higher, as increased demand for tech gadgets during the pandemic supports exports and spurs growth.
Bullish positions in the won were at their highest since November 2017, while those in the Taiwanese dollar remained a more than two-and-a-half year high.
Investors also turned slightly less bearish on the Indonesian rupiah, the region's worst performing currency so far this year.
Indonesia's central bank said earlier this week that it had room to further cut its benchmark interest rate and reiterated that the rupiah's exchange rate remains undervalued.
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.—Reuters