Investors unwound bearish bets on the Thai baht and were neutral for the first time in 11 months, a Reuters poll showed, with the economy expected to be able to absorb blows from the Omicron COVID variant and a quarantine waiver likely to boost tourism.
Market participants turned bullish on Singapore's dollar for the first time since early November, but stayed bearish on most other emerging Asian currencies ahead of the US Federal Reserve's policy decision, the fortnightly poll found on Thursday.
The poll responses were received before the Fed's statement on Wednesday.
Positions in the baht were neutral, the first time they have been anything but bearish since Feb. 25.
Thailand will reinstate its 'Test & Go' quarantine waiver for vaccinated arrivals from Feb. 1 to recharge growth in the tourism industry, which its finance minister said would help the economy grow 3.5%-4.5% this year, up from an expected 1% expansion in 2021.
"Thailand's nascent growth recovery is likely to be delayed but not derailed by the Omicron wave," Chua Han Teng, an economist at DBS Group Research, said in a note this week.
"With respect to monetary policy, the Bank of Thailand will not only lag the region, but also the Fed in normalising policy rates," Han Teng said, adding that the central bank was well placed to deal with the resulting weakness in the baht.
Analysts widely see no change to the bank's record low 0.50% policy rate this year.
By contrast, Singapore this week tightened its monetary policy settings in a surprise, out-of-cycle move in response to elevated inflationary pressures.
That served as a precursor to Fed Chairman Jerome Powell's indication that the US central bank will likely hike interest rates in March.
Investors turned short on the Indian rupee just a fortnight after going long, while bearish bets on the Philippine peso were at their highest since Oct. 7.
Long positions in the Chinese yuan were at their highest since June.
The currency ended Wednesday's domestic trading session at its highest in nearly four years due to corporate demand ahead of the week-long Lunar New Year holiday.
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.
The figures include positions held through non-deliverable forwards (NDFs).