Bearish bets build on Asian currencies as virus struggle endures

July 15, 2021 at 03:46 am EDT

(Reuters) - Investors piled bearish bets on most Asian currencies, with the Thai baht and Philippine peso taking most of the heat, as the economies struggled to rein in the pandemic and recent dollar strength undermined the local currencies, a Reuters poll showed.

Sentiment for the Philippine peso turned bearish, the poll of 11 respondents showed, with short bets most concentrated since October 2018, after ratings agency Fitch downgraded its outlook on the Southeast Asian nation to negative.

Fitch cited growing credit profile risks from the impact of COVID-19 for the country's negative outlook but maintained its investment grade score.

Commenting on Fitch's decision, the Philippine central bank chief, Benjamin Dionko, said fiscal and monetary policies were in place to support recovery and that the drag caused by the pandemic was transitory. The peso has eased 0.4% so far this week.

Short positions in the Thai baht nearly doubled to their highest since mid-August 2015, as the country suffered its worst incidence of infections yet and recorded 98 deaths on Thursday.

Earlier this week, the tourism-reliant nation's central bank said it might miss growth forecasts and that recent containment measures were seen having a bigger-than-expected impact on the economy.

Meanwhile, Malaysia's public health systems continued to be pummelled by record rises in COVID-19 cases this week, mainly due to the highly infectious Delta variant, dragging down investor confidence in the ringgit.

Bearish bets on the Malaysian unit were at their highest since March last year.

Investors also raised short bets on other Asian currencies, which fell against a firmer dollar, thanks to concerns over high infections across Asia and a spike in U.S. inflation last month that had investors' ears perked up for any guidance on tapering by Federal Reserve Chairman Jerome Powell.

Powell eventually doused such speculations by saying the economy was still far from levels the Fed wanted to see before squeezing monetary support.

Bearish wagers on the Indian rupee and Singapore's dollar grew, while soft bullish positions on the Taiwan dollar and Korean won reversed over the past 14 days.

Only the Chinese yuan maintained a marginally bullish interest, though trimmed significantly from the beginning of June.

The 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, 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 included positions held through non-deliverable forwards (NDFs).

The survey findings ASIAPOSN are provided below (positions in U.S. dollar versus each currency):

DATE USD/CNY USD/KRW USD/SGD USD/IDR USD/TWD USD/INR USD/MYR USD/PHP USD/THB

15/07 -0.15 0.27 0.53 0.23 0.13 0.68 1.06 1.06 1.56

01/07 -0.29 -0.29 0.02 0.36 -0.19 0.5 0.49 -0.04 0.85

17/06 -0.63 -0.36 -0.49 -0.5 -0.58 -0.21 -0.05 -0.31 0.2

03/06 -1.34 -0.51 -0.55 -0.4 -0.44 -0.71 0.32 -0.66 0.37

20/05 -0.33 0.43 0.37 -0.06 0.33 -0.03 0.26 -0.22 0.81

06/05 -0.52 -0.39 -0.58 0.31 -0.59 0.86 -0.04 -0.35 0.5

22/04 -0.17 -0.23 -0.44 0.56 -0.38 0.75 -0.03 -0.37 0.58

08/04 0.72 0.48 0.3 0.59 0.77 0.2 0.46 0.36 0.91

25/03 0.3 0.65 0.46 0.45 0.5 0.05 0.54 0.11 0.54

11/03 -0.06 0.55 0.55 0.22 -0.1 -0.37 0.5 0.09 0.49