Short positions on Indonesian rupiah touched their highest since November 2022, while those on the Chinese yuan were at their highest since late-August, according to a fortnightly poll of 10 respondents.

Bank Indonesia surprised markets last month when it raised interest rates by 25 basis points with an aim to stabilise the rupiah's decline.

Moreover, official data showed that Indonesia's annual inflation rate edged up in October, with some economists saying more rate hikes are likely if the currency weakens further.

The rupiah has been pressured as investors swear off riskier assets amid worries over U.S. monetary tightening and the conflict in the Middle East.

"The USD/IDR's elevated levels are likely to keep persisting well into 2024 amid risk of extended presidential election contest and U.S. rates staying higher," said Maybank analysts.

They projected the rupiah to get significant relief in the second half of next year, when the Federal Reserve likely engages in a rate-cut and political uncertainty dissipates.

Meanwhile, China's manufacturing activity unexpectedly shrank in October, even as the economy was showing signs of recovery owing to a flurry of policy support measures.

Analysts at Citi think stimulus from Beijing might not be enough given the absence of consumption-focused measures and with the private sector still struggling from regulatory policies and deregulations.

"I think the market really wants to see more improvement in the Chinese economic data which could gradually reduce short positions against yuan," said Poon Panichpibool, markets strategist at KrungThai Bank.

Bearish bets on Philippine peso were at a five-month high. Bangko Sentral ng Pilipinas delivered an off-cycle interest rate hike last week, and warned another hike could be made this month if price pressures worsen.

The Fed held interest rates steady on Wednesday as they struggled to determine whether financial conditions may be tight enough to control inflation, or whether an economy that continues to outperform may need more restraint.

"Sentiment around U.S. data could drive Asian currencies stronger in near-term but market will still have to cash in on the probability of rate hikes," added Poon.

Short positions on Malaysian ringgit were highest since July. All the poll responses were received ahead of Bank Negara Malaysia's policy decision later in the day, where it is expected to hold rates.

The Asian currency positioning 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):


02-Nov-23 1.32 1.18 0.74 1.44 1.31 1.35 1.33 0.96 0.85

19-Oct-23 1.02 1.16 0.84 1.06 1.06 1.21 0.78 0.89 0.67

5-Oct-23 1.17 1.25 0.81 1.00 1.25 0.92 1.08 0.75 1.03

21-Sep-23 1.29 0.94 0.61 0.84 0.98 1.00 1.03 0.64 0.83

7-Sep-23 1.28 1.01 0.30 0.65 0.95 0.79 0.86 0.55 0.57

24-Aug-23 1.42 0.79 0.34 0.77 1.00 0.84 1.18 0.92 0.50

10-Aug-23 0.74 0.68 0.28 0.60 1.12 0.62 0.98 0.75 0.49

27-Jul-23 0.77 0.19 -0.22 -0.14 1.17 -0.06 1.15 0.14 0.15

13-Jul-23 1.33 0.12 0.62 0.52 1.13 0.10 1.77 0.26 0.73

29-Jun-23 1.74 0.29 0.50 0.30 0.72 -0.14 1.85 0.29 1.03

15-Jun-23 1.59 -0.03 0.17 -0.33 0.68 -0.24 1.64 0.74 0.25

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Varun H K)

By Rishav Chatterjee