Thai baht leads Asia’s bullish prospects; yuan long bets on the mend: Reuters poll

February 28, 2019

By Aby Jose Koilparambil

(Reuters) – Investors remained bullish on China’s yuan for a third straight fortnight, a Reuters Poll showed on Thursday, as markets turned optimistic about the progress in Sino-U.S. trade talks.

Long positions on the yuan rose to their highest since February last year, the poll of 10 analysts showed, with investors regaining some of their lost appetite for a currency that shed nearly 6 percent against the dollar in 2018.

Global markets have taken heart from U.S. President Donald Trump’s decision earlier this week to extend a deadline to increase tariffs on imports from China, although he did not give away any clear-cut indications whether a resolution is possible or not.

Progress in trade talks between the world’s top two economies offset any dent in sentiment from soft economic data out of China lately.

Official survey results released on Thursday showed China’s service industry slowed in February, with analysts expecting further weakness this year as a slowing economy makes consumers more cautious on the spending front.

The poll respondents maintained bullish positions on the Singapore dollar, the Indonesian rupiah, the Malaysian ringgit and the Philippine peso as well.

Bullish sentiment for the Thai baht remained the strongest in the region for a third successive poll, with long bets at their highest in 13 months.

Thailand’s strong economic fundamentals, which consist of steady exports and domestic production, have made the baht a bastion of stability in Asia.

The Taiwan dollar, however, remained under pressure with bearish positions on the currency piling up in the past month and a half.

Taiwan’s export orders contracted in January for a third month on the trot, data showed last week, adding to evidence of a global tech slowdown that will likely hit profits for the island’s many technology manufacturers this year.

Meanwhile, short positions on the Indian rupee fell to their lowest since early April last year, when investors were bullish on the currency.

A bulk of the poll responses came in before India and Pakistan got involved in a military conflict this week, prompting leading powers to urge the nuclear armed neighbors to show restraint.

That sent Indian and Pakistani stocks lower on Wednesday, and caused the Indian rupee to weaken.

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).

(Reporting by Aby Jose Koilparambil and Ambar Warrick in Bengaluru; Editing by Gopakumar Warrier)

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