Bullish Asia FX bets dip, but investors optimistic on yuan

[SINGAPORE] Bullish bets on most emerging Asian currencies eased in the last two weeks as the dollar's rebound spurred profit-taking, but sentiment stayed optimistic supported by loose global monetary policies, a Reuters poll showed.

The Chinese yuan's long positions increased to the largest since late July last year, the survey of 22 fund managers, currency traders and analysts conducted from Tuesday through Thursday showed.

China's exports in March returned to growth for the first time in nine months, offering signs of stabilisation in the world's second-largest economy.

The Singapore dollar's long positions scaled back from a 3-1/2-year high struck two weeks ago as the central bank on Thursday unexpectedly eased its exchange-rate based monetary policy.

The decision sparked profit-taking in the No 3 best-performing emerging Asian currency so far this year.

The Malaysian ringgit reported smaller bullish bets as capital inflows will likely slow on market views the country's currency, stock and bond valuations are pricey. Uncertainties over who will take over as central bank governor when Zeti Akhtar Aziz retires at the end of this month has also affected sentiment.

Doubts also emerged that oil prices would extend a recent rally as there are concerns that a crude producers' meeting on Sunday may not ease the supply glut.

Bullish bets on the Taiwan dollar also dropped as the island's exports fell more than expected in March, increasing the chances the trade-reliant economy did not escape a third straight quarter of year-on-year contraction in the first quarter.

The South Korean won's long positions eased from a near two-year peak touched two weeks ago on dollar demand linked to local companies' dividend payments to foreign shareholders.

The Philippine peso posted smaller bullish bets on foreign stock selling. The country's exports in February fell by the most in four months.

Still, easier global monetary policies helped to underpin optimism in emerging Asian currencies with all nine units surveyed posting long positions. Most regional countries continued to see bond inflows.

The Indonesian rupiah's long positions resumed due to an increase in bond inflows.

Bullish bets on the Indian rupee climbed to a one-year peak on capital inflows. Last week, the central bank cut its policy interest rate by 25 basis points to 6.50 per cent, a more than five-year low.

The 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.

REUTERS