Investors turn a bit bullish on yuan, but cut more Asia FX bets

Investors turned slightly optimistic on the Chinese yuan in the last two weeks as Beijing is expected to widen the currency's trading band rather than weakening it, a Reuters poll showed on Thursday. But investors scaled back long positions on other emerging Asian currencies on concerns over China's slowing growth and worries about the strength of the US economic recovery.
The previous poll published on March 14 indicated investors have turned bearish on the yuan for the first time in nearly two years as Beijing appeared to be testing market reaction to a softening trend in the currency. In the first half of March, the People's Bank of China let the yuan's mid-point fixing weaken 0.70 percent against the dollar, its biggest 11-session loss since the China Foreign Exchange Trade System, the domestic market, was set up in 1994.
But over the following eight sessions up to Tuesday, the yuan's mid-point value rose 0.82 percent, the biggest eight session gain since October 2010. The PBOC set its midpoint at a record high for three sessions ending Wednesday. Investors turned bearish on the South Korean won in the last two weeks and were more pessimistic about the Indian rupee and the Indonesian rupiah, the latest survey of 15 currency analysts showed.
They also trimmed long positions in other emerging Asian currencies such as the Singapore dollar and the Malaysian ringgit, according to the poll, which was conducted on Wednesday and Thursday. Investors had also reduced long bets on the regional currencies in the prior survey.
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 on dollars. The figures included positions held through non-deliverable forwards (NDFs).