Investors piled up bullish bets on the South Korean won to the highest level in more than two years and increased long positions in the Philippine peso to their largest in two months during the past two weeks, a Reuters poll showed. Long positions in the won nearly grew by half, to their largest since October 2010, according to the survey of 12 currency strategists conducted on Wednesday and Thursday.
The South Korean currency hit a 14-month high against the dollar on Wednesday on demand from offshore funds and domestic exporters. The won has also been driven highest by expectations of further foreign inflows as the US Federal Reserve maintains ultra-easy monetary policy.
In addition, while foreign exchange authorities have been spotted slowing down the won's appreciation, dealers and analysts do not expect them to weaken the currency. Optimism on the Philippine peso increased to the highest since mid-September after Moody's Investors Service upgraded the country's sovereign rating in late October. Bullish bets on the Taiwan dollar also rose to their largest in nearly two months on inflows from foreign financial institutions and exporters' demand.
But long positions in most other emerging Asian currencies were slightly reduced on worries about a looming fiscal crisis in the United States. With the US presidential election out of the way, the focus has shifted to the "fiscal cliff" of nearly $600 billion worth of spending cuts and tax increases set for early 2013, which investors fear could push the world's top economy back into recession, dealing the sluggish global economy another blow.
Sentiment on the Indian rupee turned bearish once again after some signs of optimism in the last two months. The rupee has been supported after New Delhi announced a slew of reforms in September to revive the economy and attract foreign capital. The Reuters survey focused on what analysts believe are the current market positions in nine Asian emerging market currencies: Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and 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.