Sentiment toward Asian currencies has improved from two weeks ago, as worries about the risk of an anti-establishment shock from the French presidential elections subsided, a Reuters poll showed on Thursday. Bullish bets on the Taiwan dollar nearly doubled compared with the previous poll two weeks ago, and ballooned to the largest since February 2011, according to the Reuters poll of 15 analysts, traders and fund managers.
The Taiwan dollar, which hit a 2-1/2 year high of 29.940 per US dollar on Wednesday, has rallied this year on the back of foreign investor inflows into Taiwanese equities.
Taiwan's central bank deputy governor said on Wednesday volatility in the local currency against the US dollar is "unavoidable", adding that the central bank would not intervene in response to continuing foreign fund inflows.
Investors were estimated to have increased their long positions in the Indian rupee to the largest since May 2014. The rupee had hit a 20-month high against the dollar on April 26, as India's benchmark stock indexes rallied to record highs. Investors turned bullish on the Malaysian ringgit for the first time since August, with ringgit long positions now at the largest since April 2016, according to the survey.
Sentiment toward the ringgit has been improving after Malaysia's central bank announced steps in mid-April aimed at boosting liquidity in the bond market and providing additional risk management tools. The poll also showed that investors switched to long positions in the South Korean won, with won bullish bets reaching the largest in a month. Investors also increased their bullish bets on the Chinese yuan, Singapore dollar, the Indonesian rupiah, and Thai baht compared to two weeks ago, while bearish bets against the Philippine peso were reduced slightly.
Equities and emerging market currencies had rallied last week on investor relief over the first round results of France's presidential election. Going into the runoff vote on May 7, opinion polls show centrist candidate Emmanuel Macron having a strong lead of 20 percentage points over anti-euro nationalist Marine Le Pen. 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.