Sentiment toward most emerging Asian currencies deteriorated with the Thai baht suffering the largest short position in nearly 1-1/2 years, a Reuters poll showed, hit by a slowing Chinese economy and a rout in global bonds. The baht reported its highest bearish bets since January last year as the currency slumped to a near six-year low this week, the survey of 18 currency analysts of banks and fund management companies conducted between Tuesday and Thursday showed.
Last month, Thailand's central bank surprised markets by cutting its key policy rate for a second straight meeting, and relaxed curbs on capital outflows. Foreign investors continued to sell Thai bonds as top policy makers expressed a preference for a weaker baht as exports sagged and the economy struggled for momentum. India's rupee experienced its largest short positions since mid-August. Sentiment on the rupee had been bullish since early October last year before souring in recent weeks.
The rupee hit a 20-month low on May 7 as foreign investors dumped the country's financial assets on a high-profile tax row, slow progress in reforms and volatility in global markets. In the previous poll published on April 30, views on most emerging Asian currencies turned bullish for the first time in six months amid views that the US Federal Reserve may wait longer before starting to raise interest rates.
The latest survey showed long positions in the Chinese yuan fell only slightly even as the economy continued to lose steam in April despite a series of policy easings, including an interest rate cut on Sunday. Overall optimism on the renminbi held firm as China's top officials including Premier Li Keqiang and PBOC Governor Zhou Xiaochuan have pledged to keep the yuan stable despite downward pressure exerted on the currency from the slowing economy.
Other emerging Asian currencies weren't so lucky, with sentiment turning negative on the slowdown in the world's second-largest economy and as the global bond rout prompted investors to dump government bonds in the region. Bearish bets on the Indonesian rupiah rose to a near two-month high as economic growth in the first quarter slumped to its weakest annual pace since 2009. Foreign investors also continued to dump Jakarta shares.
Sentiment on South Korea's won and Malaysia's ringgit turned bearish. The won hit a one-month low on Wednesday as offshore funds sold the currency on growing risks of intervention by the foreign exchange authorities to stem its appreciation. Long positions in the Singapore dollar and the Philippine peso almost disappeared, tracking weakness in most emerging Asian currencies. The currency poll is focused on what analysts 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).
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