October 13, 2016 / 8:02 AM / 9 months ago

POLL-Fed rate hike views hurt Asia FX sentiment; yuan bearish bets climb

5 Min Read

* Yuan short positions near 3-mth peak as it resumes
weakening
    * Sing dlr bearish bets highest since Feb ahead of cbank
review
    * Baht bearish bets 1-yr high on Thai King's health woes
    * Philippine peso view worst since 2008 on politics

    By Jongwoo Cheon
    SINGAPORE, Oct 13 - Sentiment towards most emerging Asian
currencies turned bearish in the last two weeks as investors
grew more confident in the likelihood of a U.S. interest rate
hike in December, a Reuters poll showed.
    With the dollar on a firm trend, the Chinese yuan 
saw the largest bearish positions since late July, according to
the survey of 17 fund managers, analysts and currency traders
conducted between Tuesday and Thursday. (GRAPHIC: tmsnrt.rs/2aDRP78)
    After being held relatively steady for much of the summer,
the yuan has hit six-year lows in recent sessions, breaching the
key psychological level of 6.7 to the dollar without signs of
official intervention that it has seen in the past.
    That has raised questions about whether authorities want to
allow further slow depreciation to support the economy. 
    Pessimistic bets on the Singapore dollar hit an
eight-month peak on the firmer dollar and expectations that
Singapore's central bank will not ease policy at a review on
Friday despite a sputtering economy, the poll showed.
    The city-state's currency has slumped to its weakest since
March 10 as some investors priced in risks of easing, although
most economist expect the Monetary Authority of Singapore to
stand pat. 
    Sentiment on Thailand's baht also turned
pessimistic, with its bearish positions at the largest since
October last year. Views on the currency had been bullish since
late June.
    The baht touched its lowest in about nine months on
Wednesday, tracking a near 7 percent plunge in Bangkok shares
, on concerns over the health of 88-year-old King
Bhumibol Adulyadej and after police warned of a bomb plot in the
capital.  
    The health of the King has "overall not yet stabilised", the
palace said on Wednesday.
    Anxiety over his health and an eventual succession has
formed the backdrop to more than a decade of bitter political
divide in Thailand.
    The Philippine peso reported the largest short
positions since November 2008 in the depths of the global
financial crisis.
    The peso hit a seven-year low on Wednesday as recent solid
U.S. economic data added to expectations that the Federal
Reserve will raise interest rates in coming months.
    Philippine markets have been heavily sold since July, partly
due to growing uncertainty over the economic and foreign
policies of new President Rodrigo Duterte. 
    The South Korean won and the Malaysian ringgit
 saw their largest pessimistic bets since late May.
    Foreign investors sold Seoul stocks as Samsung
Electronics Co Ltd's decision to scrap its
fire-prone Galaxy Note 7 smartphone raised worries about South
Korea's exports.
    The country's bonds saw outflows on expectations that the
central bank is likely to leave interest rates unchanged in a
near term on growing household debts. The Bank of Korea earlier
on Thursday kept borrowing costs on hold. 
    The ringgit touched a near eight-month low as Malaysia's
central bank data showed the country in September suffered the
largest monthly bond outflows since August last year. 
    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 U.S. dollars.
    The figures include positions held through non-deliverable
forwards (NDFs).
    The survey findings are provided below (positions
in U.S. dollar versus each currency):

 DATE     CNY   KRW   SGD   IDR   TWD   INR   MYR   PHP   THB
 13-Oct   0.73  0.51  0.80 -0.38  0.29 -0.19  0.73  1.20  0.96
 29-Sept  0.41 -0.24  0.50 -0.75 -0.11 -0.41  0.51  0.87 -0.32
 15-Sept  0.70  0.00  0.19 -0.31 -0.10 -0.40  0.37  0.30 -0.04
 1-Sept   0.60 -0.16  0.13 -0.11 -0.23 -0.21  0.19 -0.04 -0.27
 18-Aug  -0.04 -1.08 -0.47 -0.81 -0.90 -0.60 -0.33 -0.49 -0.69
 4-Aug    0.12 -1.01 -0.52 -0.84 -0.67 -0.56  0.16 -0.04 -0.56
 21-July  1.01 -0.50  0.06 -0.63 -0.37  0.11  0.04  0.10 -0.20
 7-July   1.12 -0.11 -0.38 -0.69  0.09  0.24  0.06  0.18 -0.10
 23-Jun   0.51 -0.12 -0.47 -0.44 -0.03  0.32  0.11 -0.02 -0.04
 9-Jun    0.49  0.14 -0.03 -0.20  0.08 -0.05  0.30 -0.16  0.12
 26-May   0.96  1.22  0.74  0.75  0.79  0.48  1.08  0.35  0.91
 12-May   0.52  0.75  0.57 -0.08  0.51 -0.22  0.46  0.28  0.24
    

 (Reporting by Jongwoo Cheon; Additional reporting by Shaloo
Shrivastava in BENGALURU; Editing by Kim Coghill)

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