Views on Asia FX more bearish, won short positions largest since May 2012

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SEOUL (Oct 9): Sentiment toward most emerging Asian currencies deteriorated further in the past two weeks with short positions in South Korea's won reaching a near 2-1/2 year high, a Reuters poll showed.

Bearish bets on most regional units rose as solid U.S. data in recent weeks increased expectations that the U.S. Federal Reserve will raise interest rates faster than the market had earlier anticipated. Rising U.S. borrowing costs usually dent attractiveness of higher yields in Asia.

On Thursday - as the poll was getting completed - investors covered some of short positions in most emerging Asian currencies as minutes from the Fed's latest policy meeting eased concerns over U.S. rate rises.

Short positions in the won increased to the largest since May 2012, according to the survey of 17 currency analysts conducted between Tuesday and Thursday. On Monday, the won hit its weakest in more than six months amid expectations that South Korea's central bank may cut interest rates on Oct 15.

Views on the Malaysian ringgit grew the most pessimistic since August last year as on Oct. 1 it fell to its weakest since late March.

The Indonesian rupiah suffered the largest short positions since early January on renewed concerns over the country's current account deficit and political uncertainties.

Short positions in the Singapore dollar grew ahead of the central bank's semi-annual monetary policy meeting on Oct 14.

The Monetary Authority of Singapore is expected to stick to its tight monetary policy at the meeting, a separate Reuters poll showed. Some analysts, however, predicted the central bank may take a dovish stance given a slowdown in the city-state's economy.

The Thai baht's short-positions rose to a four-month high amid foreigners' stock selling.

Sentiment toward the Chinese yuan stayed bullish as the People's Bank of China set the official guidance rate at a stronger level. Still, long positions in the currency declined to their smallest since mid-July.

Some analysts and traders expected a rebound in regional units, saying their recent losses have been excessive.

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 are provided below (positions in U.S. dollar versus each currency):

9-Oct   -0.75  0.96  0.66  1.15  0.59 -0.03  0.73  0.47  0.57
25-Sept -0.94  0.27  0.57  0.86  0.65  0.04  0.65  0.58  0.34
11-Sept -1.15  0.19  0.93  0.42 -0.07 -0.07  0.40  0.03  0.32
28-Aug  -1.07 -0.77 -0.09  0.00 -0.14 -0.41 -0.84 -0.58 -0.21
14-Aug  -1.10 -0.62 -0.02 -0.02 -0.21  0.25 -0.83 -0.42 -0.53
31-July -0.80 -0.53 -0.09 -0.19 -0.29 -0.24 -0.53 -0.44 -0.52
17-July -0.39 -0.16 -0.31 -0.04  0.05 -0.35 -0.92 -0.34 -0.08
3-July  -0.69 -1.53 -0.47  0.64 -0.57 -0.14 -0.92 -0.69  0.28
19-June -0.18 -1.10 -0.18  0.45 -0.41 -0.34 -0.73 -0.24  0.15
5-June   0.29 -1.21 -0.06  0.51 -0.29 -1.01 -0.65 -0.69  0.73