Through the last two weeks, bullish bets on the Chinese yuan jumped to the highest since mid-January, while investors increased their long positions on the South Korean won to the highest level in about two years, a Reuters poll showed.
Currency market players remained optimistic on the outlook for most emerging Asian units, on hopes US politicians would strike a deal to avert a fiscal crisis and the fact that recent data showed recoveries in the US and Chinese economies---Asia's major export markets. Still, investors slightly reduced long positions in most regional currencies earlier this month on concern over possible intervention by central banks to stem gains in their currencies.
Highlighting the risks, South Korea dumped up to $1 billion of won on Thursday and warned of other measures in its strongest action in months to halt a rally in the currency. Earlier this week, the won's appreciation accelerated after South Korean vice-finance minister Shin Je-yoon said the country didn't believe current market conditions demanded new regulations to reduce risks from rapid foreign capital inflows. This helped the won hit a 14-month high against the dollar and a 16-month high against the yen.
Long positions on the yuan rose by half, to its highest this year, according to the poll of 15 currency strategists conducted on Wednesday and Thursday.
Rupee outlook worsens
Outlook on the rupee, however, turned grimmer, with net short positions on the currency increasing five times, compared to two weeks earlier. Bearish bets on the rupee have now climbed to their highest since late June, reversing the short trend of optimism seen after India announced reforms in September to attract foreign capital and reignite growth.
| ASIAN GAINS Positions in US dollar versus each currency | |||||||||
| Date | CNY | KRW | SGD | IDR | TWD | INR | MYR | PHP | THB |
| 30-Aug | 0.07 | -0.42 | -0.05 | 0.7 | -0.15 | 0.08 | -0.44 | -0.2 | -0.04 |
| 13-Sep | -0.59 | -0.83 | -1.03 | 0.17 | -0.82 | -0.25 | -1 | -1.13 | -0.73 |
| 27-Sep | -0.63 | -0.79 | -0.73 | 0.67 | -0.52 | -0.89 | -0.35 | -0.59 | -0.12 |
| 11-Oct | -0.79 | -0.57 | -0.49 | 1.07 | -0.21 | -0.34 | -0.18 | -0.49 | -0.12 |
| 25-Oct | -0.86 | -1.05 | -0.65 | 0.89 | 0.08 | -0.18 | -0.45 | -0.85 | -0.44 |
| 8-Nov | -0.75 | -1.47 | -0.63 | 0.72 | -0.6 | 0.16 | -0.38 | -1.12 | -0.34 |
| 22-Nov | -1.12 | -1.53 | -0.4 | 0.81 | -0.27 | 0.79 | -0.35 | -1.06 | -0.31 |
| 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 included positions held through non-deliverable forwards (NDFs). | |||||||||
Long positions on the Philippine peso, the best performing Asian currency so far this year, were scaled back slightly but remained close to three-month highs, the poll showed. Expectations of strong domestic growth have propelled the currency nearly seven per cent higher this year, a concern for the Philippines, for which exports account for about two fifths of its economic output.
The survey focused on what analysts believed were current market positions in nine Asian emerging market currencies---Chinese yuan (CNY), South Korean won (KRW), Singapore dollar (SGD), Indonesian rupiah (IDR), Taiwan dollar (TWD), Indian rupee (INR), Malaysian ringgit (MYR), Philippine peso (PHY) and Thai baht (THB).
