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POLL-Bullish bets on most Asian currencies climb on vaccine hopes, China stability

Published Jul 23, 2020 14:39
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* Long positions on Chinese yuan at highest since Feb 2018
* Investors turn bearish on baht for 1st time since late May
* Short bets on Indonesian rupiah more than double
* Risks from worsening Sino-U.S. relations may weigh on
China
growth - analysts

By Anushka Trivedi
July 23 (Reuters) - Investors raised their long bets on the
Chinese yuan and most other Asian currencies, a Reuters poll
showed, as signs of a recovery in the world's second-largest
economy and news of progress in coronavirus vaccine trials
whetted risk appetite.
Bullish positions in the yuan CNY=CFXS outpaced those in
peers and were at their highest in two-and-a-half years,
touching levels only seen before the trade war between the
United States and China started, the fortnightly poll of 16
respondents showed.
Encouraging early data from three potential COVID-19 vaccine
trials and upbeat economic indicators from China have anchored
regional markets of late, said Han Tan, a market analyst at
FXTM, but warned that the tolerance of export-reliant Asian
countries for further currency strength would be limited.

China posted better-than-expected gross domestic product
(GDP) and trade figures last week and promised higher fiscal
support and capital market reforms, boosting confidence in the
yuan and stoking a rally in local equities. Goldman Sachs analysts expect the elevated interest rate
spread between the yuan and the dollar to support further
currency inflows, and Chinese activity growth to outshine the
rest of the world in the second half of 2020.
However, they point to worsening Sino-U.S relations as a
potential threat to an economic rebound in China.
The poll responses came in by Wednesday, before markets
retreated on heightened Sino-U.S. tensions after Washington
ordered Beijing to close its consulate in Houston. Poll results showed bullish bets on the Philippine peso
PHP=PH and the Indian rupee INR=IN climbed. Sentiment
towards the two currencies has lately improved on the back of
solid net inflows.
Even as most Asian countries scrambled to stem a rise in new
coronavirus cases, yield-seeking investors bought $6.45 billion
worth of regional bonds last month, marking the biggest foreign
inflow jump in a year. On the flip side, bearish bets more than doubled on the
Indonesia rupiah IDR= after the central bank cut interest rate
last week for the fourth time this year and predicted a
"U-shaped" economic recovery from the pandemic. Meanwhile, investors turned bearish on the Thai baht
THB=TH for the first time since late May.
The resignation of Finance Minister Uttama Savanayana,
economic policy czar Somkid Jatusripitak and four other
ministers within a week has sunk the baht and worsened prospects
for the ailing economy. Reuters survey 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 TWD=TP , Indian rupee
INR=D2 , Philippine peso PHP=PDSP , 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
U.S. dollars. The figures included positions held through
non-deliverable forwards (NDFs).
The survey findings ASIAPOSN are provided below (positions
in U.S. dollar versus each currency):
DDMM CNY KRW {{2034|SGD IDIDR TWD INR MYR PHP THB
23/7 -0.8 -0.19 -0.09 0.61 -0.34 -0.38 -0.22 -0.61 0.24
09/7 -0.3 -0.06 0.13 0.26 -0.22 -0.33 -0.07 -0.48 -0.09
7
25/6 0.08 0.16 -0.05 -0.05 -0.28 0.1 0.07 -0.05 -0.24
11/6 0.14 -0.05 -0.19 -0.69 -0.26 0 0.08 -0.39 -0.41
28/5 0.72 0.8 0.41 -0.05 0.05 0.28 0.52 -0.04 -0.05
14/5 0.23 0.57 0.34 0.21 0 0.68 0.69 -0.29 0.01
30/4 0.07 0.73 0.24 0.58 0.08 0.84 0.8 0 0.38
16/4 0.26 0.71 0.32 0.86 0.19 1.14 0.74 0.23 0.63
2/4 0.67 0.95 0.8 1.55 0.38 1.25 0.85 0.39 1.01
19/3 0.57 1.22 1.18 1.57 0.18 1.22 1.14 0.56 1.23

POLL-Bullish bets on most Asian currencies climb on vaccine hopes, China stability
 

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