Short positions in all emerging Asian currencies declined, with bets on the Chinese yuan both at their lowest level since late April, according to the bi-weekly poll of 12 analysts.
Short positions in the Philippine peso, Singapore dollar and Indonesian rupiah also fell to multi-month lows.
An unchanged print for US inflation for July, the first notable sign of relief after persistently higher prices, also helped improve sentiment in the region.
Strip bets on the Thai baht fell to their lowest level since early June after the Bank of Thailand (BoT) raised its interest rate by 25 basis points on Wednesday, kicking off its post-tightening cycle. lagging behind its regional peers.
Thailand, which relies heavily on tourism, has started to see signs of a gradual economic recovery with the return of tourists, allowing the BoT to maneuver its monetary policy.
Analysts widely expect the BoT to continue the gradual normalization of its policy until the end of the year.
The baht, which is among the worst selling currencies in the survey, appears to be on the road to recovery, having appreciated nearly 4% since the start of the month. The currency depreciated by 10.2% in the first seven months of the year.
Most of the survey responses came after Thailand’s central bank announced the rate hike.
The Indonesian rupiah was also among the worst selling currencies as the country’s economy remains on the road to recovery, but rising inflation and global recession risks prompted Bank Indonesia (BI) to raise rates of interest.
Indonesia, the largest economy in Southeast Asia, is one of the last countries in the region to maintain its flexible monetary policy from the time of the pandemic.
Citi and OCBC analysts expect BI to raise its benchmark seven-day repo rate at a meeting later this month, with Citi seeing a 25 basis point increase . However, Maybank and ANZ do not see the central bank rushing to tighten.
Elsewhere, short bets on the Indian rupee, South Korean won and Taiwanese dollar fell to their lowest level since April 21.
The Asian Currency Positioning Survey focuses on what analysts and fund managers believe to be the current market positions in nine emerging market Asian currencies: Chinese yuan, South Korean won, Singapore dollar, the Indonesian rupiah, the Taiwan dollar, the Indian rupee, the Philippine peso, the Malaysian ringgit and the Thai baht.
The survey uses estimates of net long or short positions on a scale of minus 3 plus 3. A score of plus 3 indicates that the market is significantly long in the US dollar.
Figures include positions held through non-deliverable forwards (NDFs).
The results of the survey are presented below (positions in US dollars against each currency):
DATE USD/CNY USD/KRW USD/SGD USD/IDR USD/TWD USD/INR USD/MYR USD/PHP USD/THB
11-Aug-22 0.86 1.1 0.51 0.83 1.14 1 1.41 0.88 0.87
28-Jul-22 1.14 1.63 0.92 1.31 1.42 1.62 1.59 1.54 1.89
14-Jul-22 1.07 1.84 1.44 1.59 1.76 1.98 1.68 2.06 1.78
30-Jun-22 1.09 1.69 1.08 1.5 1.15 1.8 1.63 2.05 1.39
16-Jun-22 1.54 1.79 1.35 1.33 1.23 1.66 1.67 1.7 1.34
2-Jun-22 1.22 0.56 0.38 0.9 0.73 1.18 1.06 0.59 0.54
19-May-22 1.9 1.55 1.07 1.19 1.63 1.35 1.53 1.15 1.56
5-May-22 1.75 1.5 0.73 0.56 1.49 1.04 1.47 1.09 1.33
21-Apr-22 0.1 1.07 -0.17 -0.03 0.94 0.75 0.89 1 0.71
07-Apr-22 -0.41 0.99 -0.46 -0.05 0.81 0.63 0.32 0.53 0.31