Short positions in the Indonesian rupiah and the Indian rupee increased during the past two weeks despite authorities' steps to stabilise those currencies, while sentiment on other emerging Asian currencies became less bearish, a Reuters poll showed. Bearish bets on the rupiah rose to the highest level since November 2008, according to the survey of 14 currency analysts conducted between Wednesday and Thursday.
The Indonesian currency's indicative prices hit a near four year low against the dollar on Thursday on sustained dollar demand from local companies and worries about capital outflows. The weakness came even as the central bank last week surprised the market by raising the benchmark policy rate 50 basis points to 6.50 percent, double the expected hike.
Investors have been worried about the country's current account and budget deficits, as well as shrinking foreign exchange reserves. Sentiment on the rupee became more pessimistic despite steps to support the ailing currency by India's central bank and government.
Late on Monday, the Reserve Bank of India announced steps to halt the currency's decline by tightening liquidity and making it costlier for banks to access funds from the central bank. Investors doubt if Indian authorities' measures could lure capital inflows given sustained worries about sluggish economic fundamentals and the country's current account deficit.
By contrast, sentiment on some other emerging Asian currencies became less bearish as Federal Reserve Chairman Ben Bernanke pledged to keep policy accommodative for the foreseeable future, although the US central bank still expects to scaling back its stimulus. The won saw its first bullish positions since early May as the South Korean currency hit its highest in more than five weeks on Wednesday. Offshore funds and domestic exporters bought the unit.
Bullish bets on the Chinese yuan nearly doubled after touching a 10-month low two weeks ago on the central bank's guidance and the second-quarter economic growth met expectations, easing some fears of a more severe slowdown. In the previous poll, the renminbi's long positions fell to their lowest since late August on worries that a sudden cash squeeze would put more pressure on the world's second-largest economy. The Reuters survey is 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 the Thai baht.