SINGAPORE (Reuters) - Growing expectations of monetary policy easing spreading across Asia hurt sentiment towards regional currencies over the past two weeks, with short positions on China’s yuan at a near 10-month high, a Reuters poll showed on Thursday.
Investors shunned riskier assets after the European Central Bank said it would no longer accept Greek bonds as collateral for liquidity operations - a robust counter to Greece’s plan to renegotiate its heavy debts.
Short positions in the Malaysian ringgit, however, fell back to the lowest level since late November as a recovery in oil prices prompted a bout of short-covering, the survey of 16 analysts found.
Yuan short positions were at their largest since April last year, the poll conducted between Tuesday and Thursday showed.
China’s central bank cut the reserve requirement ratio for banks on Wednesday, the first industry-wide cut in more than 2-1/2 years, as it redoubled efforts to speed up flagging economic growth.
The move came after Singapore’s monetary authority on Jan. 28 surprised markets by easing policy in an unscheduled meeting. That stimulus, in turn, spurred expectations that other regional central banks could jump on the easing bandwagon.
Short positions in Singapore dollars grew to their highest since early December as the city-state’s currency fell to its weakest since August 2010 after the easing.
Bearish bets on South Korea’s won and Thailand’s baht increased slightly as some economists said the central banks of those countries would ease next.
Some Asian currencies, however, benefited as investors sought higher yields amid global low interest rates.
Long positions in the Philippine peso rose to the largest since late August. Sustained portfolio inflows lifted the peso to a near five-month high on Wednesday.
Short bets on Indonesia’s rupiah fell to the lowest level since late November on bond inflows. On Tuesday, Indonesia sold 16 trillion rupiah ($1.27 billion) of conventional bonds, well above an indicative target of 12 trillion rupiah.
Sentiment on the Indian rupee stayed optimistic, while long positions fell slightly from a seven-month high posted in the previous poll.
The Asia FX survey published two weeks ago showed sentiment towards emerging Asian currencies had improved on hopes of massive ECB monetary stimulus.
The 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 U.S. dollars. The figures include positions held through non-deliverable forwards (NDFs).
($1 = 12,640.0000 rupiah)
Additional reporting by Shaloo Shrivastava in BENGALURU; Editing by Eric Meijer