Investors built up the largest bullish bets on rupee in more than two years in recent weeks, while sentiment on the Thai baht turned the most sour in three months, a Reuters poll showed on Thursday, as the countries’ political fortunes turned in markedly different directions.
Long positions in the Philippine peso and the Malaysian ringgit rose to their highest levels in more than one year as their central banks took a hawkish stance and signalled policy rate increases may be on the cards in coming months.
Sentiment on the rupee grew to the most optimistic since February 2012 in the last two weeks, according to a survey of 12 currency analysts.
The Indian currency hit an 11-month high on Monday as strong foreign inflows led local shares to record closing highs.
Investors welcomed a landslide victory of the opposition Bharatiya Janata Party led by business-friendly Narendra Modi in the world’s largest election.
By contrast, investors piled up the most bearish short bets on the baht in three months as the country’s long-running political crisis intensified.
On Tuesday, Thailand’s army imposed martial law to restore stability after months of protests left the country without functioning government.
The army chief tried to find compromise among political rivals to end the unrest, but investors stayed cautious after neither side gave ground in a first round of army-brokered talks.
In contrast, bullish bets on the Philippine peso rose to the largest level since March 2013 as the central bank raised lenders’ reserve requirements for the second straight meeting on May 8, lifting its inflation forecast for this year and the next.
Adding to the optimism, Standard & Poor’s raised the country’s credit rating to two notches above investment grade.
The ringgit’s long positions touched their highest level since May last year as Malaysia’s central bank signalled it may need to tighten monetary policy soon to counter a “continued build-up of financial imbalances” such as rising household debt.
Malaysia’s annual economic growth picked up in the first quarter to its fastest in more than a year, while the current account surplus in the three months widened.
Meanwhile, bearish sentiment on the Chinese yuan increased slightly on fears that growth momentum in the world’s second-largest economy may be slowing more quickly than earlier expected.
In the previous poll, the renminbi’s short positions were smallest since late February.
The Chinese currency has been suffering bearish bets since mid-March in the Reuters’ bi-weekly survey, after the central bank apparently engineered a sharp slide in the currency to punish speculators betting on a non-stop appreciation trend.
Long positions in the South Korean won slightly eased as foreign exchange authorities were spotted intervening to stem its appreciation, traders said.
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).-Reuters